KARACHI: Sale tax collection from imports rose 19 percent year-on-year to Rs78.3 billion in September as economic activities resumed after lifting of lockdown, while the government was gradually easing import restrictions, official data showed.

Sales tax collection at import stage increased from Rs65.5 billion in the same month of the last year.

Sources at the Large Taxpayers Office (LTO), which has jurisdiction over reporting the collection of sales tax at the import stage, said manufacturing activities accelerated after the lockdown was lifted and that increased demand for imported raw materials and finished products.

Total imports slid around 6 percent to $6.9 billion in July-August. Government was discouraging imports to ease pressure on current account balance.

The measures to improve external account position resulted in reduction in current account deficit. But, they led to upsetting industrial sector, making the government to change its import policy and rationalise tariffs. Though it rationalised import tariffs for some industrial inputs, the plan in underway to expand the scope of tariff rationalisation.

However, the government began an exercise of tariff rationalisation to stimulate manufacturing activities dependent on imports of industrial inputs.

Due to enhanced clearance activities at the ports, the collection of sales tax at customs collectorates also improved significantly. Heavy rains in the last week of August hampered customs clearance activities, the sources said.

Model Customs Collectorate (MCC) Appraisement – East posted 27 percent growth to Rs21.1 billion in September. That was compared with Rs16.7 billion in the same month of the last year.

Likewise, MCC Appraisement – West posted 80 percent growth in sales tax collection to Rs14.4 billion in the month under review as against Rs8 billion in the corresponding month of the last year.

MCC Port Qasim collected sales tax at Rs37.4 billion in September. That was compared with Rs33.4 billion in the same month of the last year, showing an increase of 12 percent.

The collection of sales tax at the import stage during the first quarter (July-September) 2020/21 registered 3.1 percent growth despite the fact that the total import bill during the quarter registered a decline.

The LTO Karachi reported sales tax collection of Rs207 billion during the first quarter of the current fiscal year. That was compared with Rs201 billion in the corresponding quarter of the last fiscal year.

The collection of sales tax (imports) registered 8.1 percent increase to Rs876 billion during the last fiscal year of 2019/20. That was against Rs810 billion a year earlier.