The Federal Board of Revenue (FBR) has admitted that the voluntary payments of income tax along with the returns by the registered taxpayers under Universal Self Assessment Scheme (USAS) showed a decrease of 6.8 percent in 2013-14.
According to the Year Book 2013-14 issued by the FBR, the Voluntary Payments (VPs) cover payments with return and advances. In this regard, Rs 262.6 billion have been generated during FY 2013-14 as compared to Rs 244.9 billion in the corresponding period last year. Collection from VP recorded a growth of 7.2 percent. Major component of voluntary payment is advance tax where a sum of Rs 248.8 billion has been collected in FY 2013-14 against Rs 230.1 billion in FY 2012-13. The collection from advance tax has grown by 8.1 percent. The second component of VP is payment with returns, which has declined by 6.8 percent during the period under review. This shows lack of enforcement on the part of authorities. Deterrence should be created by effective audit and stringent enforcement.
The direct taxes have contributed 39 percent in the total tax receipts collected during FY 2013-14. Historically the share of direct taxes in total federal tax receipts has increased from around 15 percent in 1989-90 to 39 percent in FY: 2013-14. The net collection stood at Rs 884.1 billion reflecting a growth of 18.9 percent over the corresponding period last year. An amount of Rs 63.7 billion has been paid back as refund to the claimants as against Rs 53.4 billion during FY 2012-13, it said.
It said that the collection from this head has declined by around 9.9 percent in FY 2013-14 as compared to previous fiscal year. The reason for decline is lack of audit for several years and huge demand stuck up in litigation. Due to lack of audit, fresh demand has not been created that could translate in to collection.
The report added that the Withholding Taxes (WHT) contributes a major chunk, ie, around 63 percent in the collection of direct taxes. The WHT collection during FY 13-14 has been Rs 578.4 against Rs 436 billion during 2012-13 indicating a growth of 32.6 percent. The nine major components of withholding taxes contributed around 88 percent of total WHT collection. These are contracts, imports, salary, telephone, export, bank interest/securities, cash withdrawal, dividends and electricity. The highest growth in WHT collection has been from telephone (92 percent), followed by cash withdrawal (53 percent), salary (29 percent), dividends (26 percent), electric bills (23.3 percent) and contracts (22.5 percent). The reason behind vibrant growth is effective monitoring of WHT by creating special monitoring units and rationalisation of withholding tax rates, the report said.
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