The collection of withholding taxes under the heads “purchaser” and “transfer” of immovable property has exhibited enormous growth of around 105 percent during 2020-21 due to increased activities in the real estate sector.
According to an FBR report on withholding taxes, the withholding tax collection shared around 69 percent of the total gross collection of Income Tax during 2020-21.
The income from property has also improved its collection by 19 percent during the period under review. All the remaining major withholding taxes exhibited positive growth in the collection except cash withdrawal and technical fees. Withholding tax on cash withdrawals to the extent of foreign remittances was exempted during Budget 2020-21.
As far as the decline in the collection of technical fees is concerned, although withholding tax rates have not been changed in the Budget FY2020-21, collection dropped by around 12 percent. It seems that lesser payments to the non-resident might have resulted in the drop.
The report said that the withholding tax from export during 2020-21 improved by 9.9 percent mainly due to an increase in the value of export. Withholding tax collection from salaries exhibited 17.3 percent growth in the collection due to an increase in the salaries during Budget FY 2020-21.
The withholding tax under the head of the telephone has reflected a 15.6 percent growth in the collection during FY2020-21. This jump in the collection is mainly attributable to growth in the telecom industry i.e., increased active SIMs in the country from Rs.167.3 million1 at the end of June 2021 to 182 million at the end of March 2021 and improved internet usage in the form of broadband.
As far as the yield from electricity is concerned, the collection of withholding taxes during the period under review improved by around 13% mainly due to additional generation of 6360 GWh2 during July-April FY: 2021 and increased share in the consumption of electricity in the industry, the report added.
