Corporate sector contributes Rs3,061 billion in income tax for FY2023-24

ISLAMABAD: According to a recent report from the Federal Board of Revenue (FBR), the corporate sector contributed Rs3,061 billion in income tax for the fiscal year 2023-24. The report outlines the distribution of tax revenues for the year, showcasing the performance of various segments.

Corporate tax revenues were the highest, amounting to Rs3,061 billion, followed by individual taxpayers at Rs1,119 billion, and associations of persons (AOPs) contributing Rs353 billion. This demonstrates the FBR’s success in promoting balanced tax contributions and improving compliance among taxpayers.

The revenue performance for FY 2023-24 indicates significant achievements for the FBR across various tax instruments, especially in direct taxes, which exceeded their revised targets by a considerable margin.

Direct taxes achieved 121.8 percent of their target, with income tax collections at 121.2 percent and capital value tax (CVT) exceeding expectations at 125.2 percent. Notably, collections for the Workers Welfare Fund (WWF) and the Workers Profit Participation Fund (WPPF) were especially remarkable, achieving 196.8 percent of their target, highlighting the FBR’s improved capacity to capture these revenue streams.

While sales tax collections (85.6 percent) and Customs duties (83.4 percent) fell short of their respective targets, they still made significant contributions to the overall revenue.

The Federal Excise Duty (FED) collections remained steady, reaching 96.2 percent of the target, demonstrating resilience in challenging conditions. Collectively, these results underscore the FBR’s commitment to maintaining a diverse and robust revenue base, which is essential for fiscal sustainability and economic growth.

Additionally, during the fiscal year 2023-24, the Customs Duty figures included a ‘Special Customs Duty’ of nearly Rs21.3 billion, levied as Export Development Surcharge (EDS) under Section 11 of the Finance Act 1991, as amended by an SRO issued by the Ministry of Finance on January 4, 2003.

This collection is part of Customs Duties and has been reconciled by the FBR with the Accountant General of Pakistan Revenue (AGPR) under account head B-02203 (Receipts).

However, amendments made to the Export Development Fund (EDF) Act 1999 by the Finance Act 2022 state that the EDF will comprise “all receipts from the Export Development Surcharge.”

As a result, the EDS is now directly transferred by the State Bank of Pakistan (SBP) to the EDF account. This amendment has created some ambiguity, leading to a lack of reconciliation between the FBR and AGPR. The issue remains under discussion between the two entities as per a letter from the Finance Division dated January 25, 2024.