ISLAMABAD: Income tax collection through demand creation, which involves the efforts of tax officials, grew 43 per cent year-on-year in 2014-15, said a bi-annual review of the Federal Board of Revenue (FBR) released on Monday.
The report reviewed the performance of the income tax department in three areas — demand creation, voluntarily payment and withholding tax (WHT) collection.
Resumption of audits, which were stalled during previous fiscal years, helped spur this growth, the report said.
The share of this kind of collection in total income tax revenue rose to 10.6pc in 2014-15 from 8pc in the preceding fiscal year. This is an area where more efforts are needed from the tax department to plug loopholes for generating more tax.
The second component of the income tax collection is the voluntarily payment. This component includes payments with return and advances.
Collection from voluntarily payment increased 9.5pc. Collection from advance tax, a major component of voluntary payment, grew by 8.4pc.
Collection through payment with returns component rose 30pc during the year under review.
The share of voluntary payment in overall income tax collection, however, fell to 26.3pc in 2014-15 from 28.7pc a year earlier.
Collection through withholding tax rose 20pc year-on-year, due mainly to increase in the number of goods and services in the last couple of years on which WHT is imposed.
The share of WHT collection in the overall income tax collection also went up, from 62.5pc in FY14 to 63.2pc in 2014-15.
The nine major components that contributed around 88pc of the total WHT collection were: contracts, imports, salary, telephone, export, bank interest/securities, cash withdrawal, dividends and electricity.
The highest growth in WHT collection was in electric bills (39.4pc), followed by contracts (36.1pc), cash withdrawals (25.4pc), salary (23.1pc), bank interest (22.4pc), dividends (21.6pc) and imports (19pc).
According to the report, the reason behind vibrant growth was effective monitoring of WHT by creating special monitoring units and rationalisation of withholding tax rates.