Initially only 11 service sectors were included in Schedule-II of Khyber Pakhtunkhwa Finance Act 2013. During the period from 2014-15 to 2016-17 the tax base has been broadened by adding more sectors in Schedule-II. The total taxable sectors in a year 2017-18 reached to ninety one (91). On August 6, 2013, KPRA started its journey by registering seven (07) persons which number raised to three hundred and eight (308) at end of June, 2014 and by December 2017, 1160 registered taxpayers have regularly filed their monthly returns.
In the first year of its establishment in 2013-14, KPRA was able to collect Rs. 6.02 billion against the target of Rs. 6.0 billion. During the next financial year i.e. 2014-15 the target was raised to Rs. 12 billion (100% increase) without any empirical evidence and altogether ignoring the capacity of nascent organization. Resultantly, the organization was able to collect Rs. 6.2 billion. Again, in the financial year 2015-16, a target of Rs. 14 billion was fixed. However, the target was revised to Rs. 8.0 billion against which a total collection of Rs. 7.2 billion could be managed.
During the year 2016-17, the Government of Khyber Pakhtunkhwa set the target of Rs. 10 billion, which represented an increase of 25% over the previous year’s target. KPRA collected revenue of Rs. 10.27 billion which include Rs. 1.4 billion as recovery from a Court case.
The below graph clearly indicates upward trend in revenue collection. This trend is sustainable provided
Year wise revenue collected (Rs in Billion)
The increase in revenue collection by KPRA justifies the decision of transferring the sales tax on services collection to the provinces.