Income tax collection from profit on bank deposits increased by 15 percent in the first half of the fiscal year 2021 (July to December 2020).
Federal Board of Revenue’s (FBR) Regional Tax Office (RTO) – Karachi collected Rs. 32 billion during the period in concern, as compared to Rs. 28 billion collected during the same period last year.
The deposits of the banking system hit a record high at Rs. 17.8 trillion as of December 31, 2020. The reason for this increase is said to be that the investors preferred to keep their savings in the banking system amid the coronavirus pandemic and avoided spending.
During the lockdown period, commercial and industrial activities all across the country came to a grinding halt, leading to lower investment opportunities and making people curb their regular expenditure behaviors.
The economic growth also contracted by 0.4 percent during the previous fiscal year, which also became a contributing factor to lower investments. This fiscal year, it is expected to recover by 1.5 to 2 percent.
On a monthly collection basis, in December 2020 the income tax collection on profits from bank deposits clocked in at Rs. 4.1 billion as compared to Rs. 4 billion in December 2019, showing a 3 percent increase.