A tug of war between customs department and Large Taxpayers Unit (LTU), Karachi, over revenue adjustment is going to be intensified, as the latter remains feckless to achieve September's revenue target, it was learnt on Wednesday. According to sources, the Federal Board of Revenue (FBR) has set a revenue target of Rs 93 billion for LTU Karachi; however, the largest revenue collection arm of the FBR is limping to collect not more than Rs 78 billion in September.
When contacted, official sources at LTU Karachi, held the customs department responsible for a revenue shortfall of Rs 15 billion in September's collection. They said the customs department was allegedly pressurising the clearing agents or importers to file single challans for all duty and taxes, which was against the law.
They said that revenue generated from income tax, sales tax and federal excise duty at the import stage fell within the ambit of LTU Karachi and the clearing agents or importers were restricted to file separate challans for each levy. However, the customs department was involved in violating rules to achieve its revenue target. Official sources said that the customs department did similar practice in June, 2014 to meet its annual budgetary target.
The sources said that all three taxes - income tax, sales tax and federal excise duty - which were supposed to be maintained in the ledger of LTU, Karachi, were forcibly being managed in customs account just to meet September's revenue target. They said that LTU, Karachi, used to collect revenue to the tune of Rs 2-3 billion at import stage on daily basis but now only Rs 800 million were being registered that resulted in massive revenue shortfall.
Replying to a question, the sources said that the department had communicated its reservation to FBR with a request to take immediate action to prevent the customs department from such illegal activity. Moreover, the official sources said that although no positive action had been taken so far, it was for sure that the customs department would be restricted not to follow the said practice in future to meet its annual revenue budgetary target.
They also dispelled the impression of negative impact on the revenue collection because of the conflict between LTU Karachi, and the customs department, saying that the row over revenue adjustment would not affect the revenue collection but it would deprive the LTU of its legitimate revenue. When contacted, customs officials refused to comment on the issue, saying that it was decided by the customs high-ups in Islamabad and the Karachi office was just following the instructions.