IT collection on demand falls 10pc

E-Paper | April 24, 2026

ISLAMABAD: Income tax collection on demand fell by 9.9 per cent in 2013-14 from a year ago, bringing into question the efficiency of Inland Revenue Service (IRS) during the first year of the present government.

According to official statistics, collection on demand, an important component of income tax, dropped to Rs80.582 billion in FY14 from Rs89.427bn.

The Federal Board of Revenue (FBR) has established 19 regional tax offices and revenue collection is mainly done through at-source deduction, which ranges between 80pc and 90pc.

As per statistics, the efforts of income tax officials only led to 8.7pc of the total income tax collection during the fiscal year as against 11.5pc in the previous year. The reason for decline is lack of audit for several years due to which fresh demand has not been created that could translate into collection.

The collection from voluntary compliance, another major component of income tax comprising collection with returns and advance payments, grew by 7.2pc to Rs262.598bn in 2013-14 compared with Rs244.92bn a year ago.

The share of voluntary payment in the total collection dropped to 28.4pc in FY14 from 31.6pc.

Advance taxes grew by 8.1pc as Rs248.8 billion was collected in FY14 against Rs230.1bn in FY13. It shows more reliance on advance payments and lesser focus on tax paid with returns.

As for payment with returns, the decline was 6.8pc during the year.

The withholding tax continued to be the leading source of direct tax receipts as its share in the total tax rose to 62.5pc from 56.2pc.

The collection of withholding tax was Rs578.413bn in FY14 as against Rs436.087bn in FY13, reflecting an increase of 32.6pc.

The highest growth came from telephone bills which stood at 92pc followed by withdrawal 53pc, salary 29pc, dividends 26pc, electric bills 23.3 pc, and contracts 22.5pc, respectively.

Published in Dawn, October 18th, 2014

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Zulfiqar Ahmed

Oct 19, 2014 02:45pm

There are many ways to increase tax efficiency if government shows seriousness in this area. They can look around in third world countries who boosted their tax collection using IT systems. A great example is in Tanzania and Kenya where they developed cash register machines that are connected with central tax system of inland revenue. Every small business in Tanzania and Kenya is forced by law to use cash register and each invoice created for a customer is transferred automatically to the inland revenue. No one can mess around with this machine as it will create alert to the inland revenue. The governments over there have hundreds of under cover inland revenue officers visiting businesses pretending to be customers and if they get the invoice for their order if there is a discrepancy on the invoice, the business is fined up to $10,000 and 5 years mandatory jail term. If a customer is involved with a business doing the same, then the both are charged for fraud. This implementation increased tax revenue by 13% in its first year of implementation and the government is hoping the similar increase in revenue this year. Unfortunately we are not serious about tax collection using most efficient methods. There is only talk but no action.

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Zulfiqar Ahmed

Oct 19, 2014 02:45pm

test comment

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M Rafique

Oct 20, 2014 10:19am

The actual issue is who have not paid the Rs.9 billion or FBR is deliberately ignoring the peoples responsible for this deficit. Its PML(N) govt such things are normal in their tenure Some time back Finance Minister has stopped the release the list of income tax defaulters, firstly announced its release by FBR.

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