ISLAMABAD: There is a massive decrease of 47.3 percent in collection of tax demands and recovery of income tax arrears during the first half of 2021-22 by the tax machinery when compared with same period of 2020-21.

The Federal Board of Revenue (FBR) report for 2021-22 revealed that the FBR has collected Rs20.252 billion from recovery of income tax arrears and creation of tax demands during July-December (2021-22) against Rs38 billion in July-December (2020-21), reflecting a decrease of 47.3 percent.

The break-up revealed that the recovery of income tax arrears witnessed a decrease of 31.9 percent whereas collection from current demands showed a decrease of 62.5 percent during the period under review.

The recovery of tax arrears and collection from income tax demands reflects the actual efforts of the tax machinery in recovery of due amount of taxes. As compared to previous fiscal year, there is a decrease of 47.3 percent in recovery of tax demands and income tax arrears during first half of 2021-22.

The collection on demand as a whole and it’s both components witness decline during the first half of the 2021-22. This was primarily because of the FBR policy of providing maximum facilitation to the business community and furnishing conducive business environment for greater economic growth. The collection from current demands declined by 62.5 percent, while the collection of arrear demand decreased by 31.9 percent.

Major part of income tax comes from withholding taxes, whereas, CoD shares around two percent.

The second component is the voluntary payments, which has shown a good progress with 18.1 percent growth during July-December (2021-22).

The payment with returns has recorded a very healthy growth of around 48 percent and advance tax by 11.7 percent.

This is reflective of the greater confidence shown by the business community in the FBR’s facilitation initiatives, the FBR added.

Copyright Business Recorder, 2022