Karachi large taxpayer unit told to ensure over Rs 36 billion sales tax recovery

ISLAMABAD (March 14 2003) : Taking serious note of less sales tax collection by Large Taxpayer Unit (LTU), Karachi, as compared to other ST collectorates, the Central Board of Revenue (CBR) has directed the Karachi LTU director-general to ensure Rs 36,227 million sales tax collection by the end of current fiscal 2002-03.

The CBR was responding to LTU's apprehensions vis-a-vis enhanced sales tax target for the LTU as compared to other collectorates.

Pakistan's top multinational companies and largest taxpaying concerns were operating under one roof at LTU as a part of restructuring plan of tax machinery.

According to sources, the CBR has conveyed to the LTU director-general that the revenue collection target for LTU was fixed taking into account of all aspects of collection, including past trend, tax potential and performance of other collectorates of sales tax.

First, sales tax payment by registered persons during July 2002 was Rs 2,501.98 million, showing an increase of 117 percent over the collection of Rs 1,150.54 million in the same period last year.

Therefore, the target was fixed at Rs 36,227 million for LTU during the current financial year, which showed an increase of 75 percent over the collection of Rs 20,725 million in 2001-02 from the registered persons now within the jurisdiction of LTU.

Secondly, the CBR posted knowledgeable and hard working officials to run the affairs of LTU. It was correctly assumed the increase in revenue by LTU would be higher as compared to the increase in revenue by other ST collectorates.

The increase in revenue during July 2002 was 117 percent when the LTU was not fully operational, but in the subsequent months it has been static (generally on the decline), which reflects the performance of the sales tax officials at the LTU.

On the other hand, the increase in revenue collection at other collectorates has shown a significant enhancement like Lahore ST Collectorate, has indicated a growth of 49.1 percent over the corresponding period last fiscal.

The sales tax targets for other collectorates were also fixed at a much higher level for fiscal 2002-03 on the basis of tax potential of those collectorates.

The target of Karachi (West) is fixed at Rs 5,819 million in 2002-03 against the collection of Rs 3,203 million during 2001-02 ie an increase of 82 percent; Gujranwala: Rs 4,136 million against the collection of Rs 1,844 million ie an increase of 124 percent; Hub: Rs 2,947 million against the collection of Rs 1,724 million ie an increase of 71 percent, and the target of Peshawar was fixed at Rs 7,602 million in 2002-03 against the collection of Rs 4,531 million in 2001-02 ie an increase of 68 percent.

The CBR has noted with great concern that some of LTU sales tax officials were not complying with its day-to-day instructions.

The officers working at LTU are well-versed with the secretariat instructions whereby all correspondence through the CBR is made under the signature of section officer/second secretary/secretary concerned.

In addition, the CBR has also issued instructions that all correspondence with CBR by the field formation is to be made under the signature of the collector/regional commissioner/head of the department.

The CBR expected that the LTU officers would follow the laid down instructions in future.

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