KARACHI, Nov 25: The newly established Large Taxpayers Unit (LTU) has registered higher growth in revenue collection during the first quarter (July-Sept) of current fiscal 2002-03. Whereas collection in sales tax grew by 39.09 per cent and central excise duty (CED) improved by one per cent. However, income tax could not make any worth mentioning growth.

Under the World Bank and the IMF funded programme of revamping the CBR, an LTU unit was set up earlier this year to facilitate large taxpayers, who have accumulated effect of all category of taxes above Rs25 million per annum.

In order to provide ‘one window’ operation to large taxpayers, the CBR has brought all the major heads of taxes, including income tax, sales tax and central excise duty, under one roof. The country’s first LTU at Karachi has started its function from the start of new fiscal year i.e. 2002-03.

According to the performance report of LTU for the first quarter ending September 30, 2002, collection of sales tax was higher at Rs6.841 billion or 39.09 per cent over the corresponding period last year when collection stood at Rs3.947 billion.

Similarly, central excise collection made a marginal improvement of one per cent at Rs1.058 billion against Rs1.051 billion of the same period last year.

The 292 cases transferred from the Corporation Region of Income Tax, Karachi, to LTU gave satisfactory performance during the July-Sept period. Prior to transfer of these cases the corporate region paid around one billion rupees towards refunds, which slashed down the collection figures of the Unit.

Under the CBR’s directives the LTU has also made huge refund of Rs2.316 billion from its own collection with a bigger chunk of Rs1.04 billion going towards SLIC refund.

The income tax collection of advance tax under section 147 stood at Rs3.203 billion. Collection of Rs259 million were made out of arrears demand. Whereas demand deleted (appeal effect) amounted to Rs620 million. Similarly, demand amounting to Rs1.487 billion was identified as stuck-up in stay and rectification.

The LTU is headed by the director general of grade 21 from the income tax group and assisted by two income tax commissioners of grade 20. There is one sales tax collector of grade 20. It is a sort of pilot project and experience gained from this unit will be applied to future LTU likely to be set up in other parts of the country.

The government has already established a Medium and Small Taxpayers Unit (MTU) in Lahore, which has started functioning from this month. The basic objective of such units, besides facilitating services of taxpayers, is to bring automation in the entire working of tax collection system.

But there is a big question mark being raised by tax experts whether this will assist in enhancing revenue collection or not as the government after spending millions of rupees on such costly set-ups genuinely would be expecting to improve upon voluntary compliance from taxpayers.

The LTU have six divisions — audit, enforcement (income tax), legal division, TF division, information processing and human resource management division. They are functional based divisions and work upon specified areas and responsibilities.

The LTU has issued 541 exemption certificates applications received out of which 477 certificates have been issued on collecting Rs148 million.

The legal division received and examined 311 appellate orders from different forums. It filed 44 second appeals in Income Tax Appellate Tribunal (ITAT) and 11 references made to the High Court.

Hearings in 370 cases were attended by this division before different appellate forums.