Withholding tax on contract was the leading contributor to income tax collection as it stood at Rs51.715 billion in July-Jan period this year as against Rs43.828 billion over the same period last year, showing an increase of 18 per cent. - File photo

ISLAMABAD: Withholding tax collection recorded a growth of 22 per cent in the first seven months of the current fiscal year from a year ago.

Withholding tax, even after the introduction of the Universal Self Assessment Scheme, was the major contributor to the revenue generated through income tax during the period under review.

Statistics showed that the revenue generated from major withholding revenue spinners reached R197.612 billion in July-Jan period this year as against Rs161.852 billion over the corresponding period last year, reflecting an increase of over 22 per cent. This showed poor collection of income tax.

As withholding tax continued to be a dominant component of income, it indicated that the income tax officials had no role in these collections.

Withholding tax on contract was the leading contributor to income tax collection as it stood at Rs51.715 billion in July-Jan period this year as against Rs43.828 billion over the same period last year, showing an increase of 18 per cent.

Higher government spending on infrastructure contributed to higher deductions on contracts during the period under review.

Imports emerged second biggest withholding revenue spinners as collection from this head reached Rs48.070 billion in the first seven months of this year as against Rs33.965 billion over the same period last year, showing an increase of 41.5 per cent.

The robust growth in imports flows has led to additional withholding deduction on imports.

Withholding tax collection on export proceeds recorded a nominal growth of 4.9 per cent to Rs12.389 billion in July-Jan period this year as against Rs11.810 billion over the corresponding period last year.

The paltry growth in withholding tax was because of slowdown in export proceed during the period under review.

The deduction of withholding on salaries surged by 20.1 per cent to Rs26.970 billion during the period under review as against Rs22.449 billion over the same period last year. The increase in salaries in the last budget led to additional withholding for the income tax department.

A substantial growth of 16.3 per cent was recorded in the case of withholding tax deduction on telephone bills due to increasing use of mobile phones and prepaid phone cards.

The revenue reached Rs17.320 billion in July-Jan period this year as against Rs14.893 billion over the same period last year.

The withholding tax collection on bank interest payments and securities recorded an impressive growth of 36.1 per cent to Rs17.670 billion during the period under review as against Rs14.893 billion over the same period last year. Collection from dividends reached Rs9.503 billion in the first seven months this year as against Rs5.701 billion over the same period last year, showing an increase of 66.7 per cent.

Another indicator of economic prosperity was the increased consumption of electricity. However, collection of withholding in this head dropped by 10.7 per cent to Rs7.274 billion during the period under review as against Rs8.144 billion over the corresponding period last year.

This showed that electricity consumption dropped significantly because of loadshedding. However, government revised upward the electricity tariff to raise revenue which fell because of low power consumption.

The withholding collection dropped by 17 per cent to Rs6.701 billion in July-Jan period this year as against Rs8.076 billion over the same period last year. This decline is because of cut in the rate of withholding in the last budget.