Levy of one percent duty and RD: exceptional growth of 45.8 percent noted in customs duty

The imposition of one percent additional duty on imports and regulatory duty on certain items from December 1, 2015 has enabled the Federal Board of Revenue (FBR) to show a growth of 45.8 percent in the collection of customs duty in December 2015. Highly-placed FBR officials told Business Recorder Thursday that the extraordinary growth of 45.8 percent in collection of duty on imports has direct impact on increase in sales tax and withholding tax collection at the import stage.
The raise in import duty subsequently results in increase in sales tax and WHT at import stage. Sales tax on import has shown significant growth of 26.6 percent at import stage during December 2015. The sales tax and withholding tax on import has been calculated on the basis of customs value of imported goods. Resultantly, the increase in import duty has also impact on other taxes collected at import stage.
Official further explained that since the sales tax/ Federal Excise Duty and income tax (WHT) is calculated on cost and freight (C&F) value of imports as increased by CD and RD, therefore, imposition of recent RD on impost has sizeably increased the collection of sales tax and IT as well.
The detailed analysis of the impact of revenue measures of Rs 40 billion would be carried out by the FBR. The government had taken taxation measures of Rs 40 billion by imposing a 5 to 10 percent regulatory duty (RD) on the import of 350 luxury and non-essential items, one percent additional customs duty across the board on all tariff slabs, an increase in Federal Excise Duty (FED) on cigarettes and a raise in fixed duty on import of old and used vehicles (above 1000cc) from December 1, 2015.
The monthly collection of custom duty revealed that the import duty amounted to Rs 39.399 billion during December 2015 against Rs 27.021 billion in same period of 2014, reflecting a growth of 45.8 percent. Sales tax collection at the import stage was Rs 319 billion during the period under review against Rs 274.766 billion in July-December 2014-15, showing an increase of 16.1 percent.
According to the official, Rs 40 billion revenue measures has also worked out the revenue from increased sales tax and withholding tax collection at the import stage consequently raise in import duties and regulatory duty. Five to 10 percent Regulatory Duty was imposed on 61 items which were exempted from the duty. The government had also increased the regulatory duty on 289 items from existing 10 percent to 15 percent and one percent additional duty was imposed on various imported items.