KARACHI: Income tax collection on exports fell 12 percent during the first quarter of the current fiscal year 2020/21 as sluggish outbound shipments have been further impacted by the coronavirus-related lockdown, sources said on Monday.
The Federal Revenue Council (FBR) revenue tax collection from exports fell to Rs1.55 billion during the first quarter of the current fiscal year compared to Rs1.77 billion in the same period last fiscal year.
Officials at the Karachi Large Tax Paying Office (LTO) said tax collection under the head of exports witnessed a decline due to lower export revenues following falling demand in international markets.
Officials further said heavy rains in Karachi at the end of August also affected the exemption of export shipments. In addition, holidays in the same month hamper communication of the transport of export goods.
The country’s exports saw a decline of about one percent to $ 5.47 billion during the first quarter of the current fiscal year compared with $ 5.51 billion in the same quarter last year.
Exports showed their first recovery in July after a consecutive downtrend since March amid the coronavirus lockdown. Ease of locking paved roads for clearing jammed orders at the port. Pakistan’s economy, which was already faltering before the coronavirus, has been increasingly persecuted by months of lockdown. Growth is expected to recover in 1 to 1.5 percent this fiscal year after a contraction in the previous fiscal year.
Exports have continued to contract since the government took over. The trade deficit narrowed 27.1 percent to $ 23.1 billion in the last fiscal year 2019/20, but the decline was mainly due to squeezing imports rather than restoring the export sector.
Exports fell 6.8 percent to $ 21.3 billion, while imports fell a sharp 18.6 percent to $ 44.5 billion over the last fiscal year. LTO sources said under-head tax collection improved in September as exports recovered after the lifting of the lockdown.
The collection was Rs647 million in September compared to Rs576 million in the same month last year. FBR collects one percent income tax on the total amount of export revenues under Section 154 of the Income Tax Ordinance, 2001.
The bank collects a tax on behalf of FBR from exporters when export receipts are deposited into Pakistan.
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