The reduction in the size of the Public Sector Development Programme (PSDP) during 2010-2011 has direct negative impact on the withholding tax collection from contracts/supplies. According to the FBR quarterly report issued here on Thursday, withholding tax is the third important component of income tax.
During the first half of 2010-2011, tax receipts worth Rs 151.3 billion have been collected against Rs 134.1 billion in the corresponding period of the last year entailing a significant growth of 12.8 percent. The share of WHT in gross income tax collection has remained 59 percent during the period under review.
The major revenue spinners of WHT are: contracts/supplies, imports, salary, telephone, exports, bank interest, electricity, cash withdrawals and dividends. The report further said that the major heads contributed 90.9 percent of total WHT collection. The major share of WHT comes from contracts (25. 1percent) followed by imports (19 percent), salary (13 percent), telephone bills (8.5 percent) exports (6.5 percent) and so on.
A healthy performance in receipts on account of dividends, salary payments, imports, exports, telephone and bank interest has been witnessed during the first half of 2010-2011. However, a comparatively low growth of 8.3 percent has been recorded in cash withdrawals from banks. On the other hand, there has been a decline in WHT on contracts and electrical bills. The reason of decline in revenue collection from contracts/supplies is mainly due to reduction in the size of PSDP by the government, FBR added.