The Large Taxpayer Unit (LTU), Karachi, has experienced a major shortfall in GST collection, during the first half of 2006-07 from five leading sectors, which include automobile industry, POL products, cement, air-conditioners and insecticides.
These five sectors contributed Rs 546.002 million as sales tax in July-December 2006-07, against Rs 2081.109 million of corresponding period of 2005-06, reflecting a negative growth of Rs 1535.107 million. As far as overall GST collection is concerned, the LTU, Karachi, collected Rs 12,251.96 million sales tax in July-December 2006-07 against the target of Rs 13,289 million, reflecting a shortfall of 7.8 percent.
In this regard, LTU, Karachi, has conducted a detailed analysis specifying reasons for low sales tax collection from these important sectors. The issue would also be taken up in the sales tax collectors' conference on Tuesday.
Sources said on Monday that sales tax collection from automobiles sector was Rs 305.297 million against Rs 1530.63 million in July-December 2005-06, reflecting a decrease of 80 percent. GST collection from POL products was Rs 53.039 million against Rs 247.49 million, showing a decrease of 194 percent.
Cement sector contributed Rs 98.572 million as sales tax against Rs 175.75 million, reflecting a decrease of 77 percent. Sales tax collection from air-conditioners remained Rs 76.057 million against Rs 95.760 million, showing a decrease of 20 percent. And, the LTU, Karachi, collected Rs 13.037 million from insecticides against Rs 31.404 million, with a decrease of 58 percent.
According to Karachi LTU analysis, the combined effect of less advance booking, higher bank leasing rates and influx of comparatively cheaper imported vehicles were the major factors for shortfall in automobiles sector.
The increase in POL reimbursements to OMCs together with increase in exports including supplies to international flights adversely impacted the net sales tax yield from POL products.
The study has specified that exports to Afghanistan, import of cheaper foreign substitutes, less demand in local construction industry and heavy rainfalls were responsible for less sales tax collection from cement sector.
Highlighting reasons for low sales tax collection from air-conditioners, LTU, Karachi has specified that influx of imported air-conditioners at relatively competitive rates plus decrease in demand of air-conditioning equipment by local automobile industry negatively affected local air-conditioner manufacturing industry.
Due to higher purchase/adjustments in the July-December 2006-07 period, net revenue earnings from insecticides/pesticides dwindled, the LTU added. According to the analysis, compensatory increased collection on non-loss items played an important cushioning role in saving the targets from any serious damage, sources said.
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