November 13, 2019
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    Direct tax revenue up to 18.1 from16.4% Featured

    June 17, 2019

    The revenue from direct tax collected by the Inland Revenue Department (IRD) has increased to 18.1 per cent during the year 2018 from 16.4 per cent in the previous year according to the latest reports.The Department has recorded a revenue of Rs 836 billion during the year 2017, an increase of Rs 194 billion over the previous year.The 2017 IRD Performance report in Chapter 4, Taxes in Default, details that for income tax gross Rs. 117 billion are in default. There is a penalty of Rs 69 billion in relation to taxes in default. The penalty is generally, 10 percent for the non-payments on the due date and further 2 percent for each month of default until it reaches 50 percent of tax in case of income tax and 100 percent with regards to value-added tax.

    Revenue collections, as a percentage of the estimated figure, are 98.6 percent for value-added tax and 88.4 percent for income tax. The annual report for 2018 of the Central Bank in the chapter on revenue notes that ‘the share of revenue from direct taxes increased to 18.1 per cent during the year from 16.4 per cent in the previous year, reflecting mainly the impact of the implementation of the new Inland Revenue Act with effect from April 1, 2018 revenue from income taxes increased marginally to 2.1 percent in 2018 from 2 percent in 2017 while in nominal terms the income tax revenue collection increased significantly by 13.1 per cent to Rs. 310.4 billion during the year from Rs. 274.6 billion in the previous year.

    Revenue from PAYE tax also improved during the year by 25.7 percent to Rs. 41.4 billion from Rs. 32.9 billion in 2017, largely due to improvements in the monitoring process related to the submission of PAYE returns and payments with the initiation of the RAMIS system.

    The low government revenue resulting from delays in implementing revenue enhancement measures, tax evasion, tax avoidance, and poor tax administration continued to remain a major concern. As such, there is a strong need for broadening the tax base through robust revenue reforms, including the effective implementation of the new Inland Revenue Act and efforts to make revenue administration more efficient while expediting the automation process of major revenue collecting agencies.

    Last modified on Monday, 17 June 2019 13:01

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