ISLAMABAD: The federal government has given Rs540 billion worth tax exemptions to affluent businesses during the current fiscal year, economic survey documents reveal.
Economic Survey indicates that the government has given tax exemptions worth Rs281.05 billion in sales tax, meanwhile, the government sustained losses worth Rs61.3 billion due to reduced rates for export-oriented sectors such as textile, carpets, leather, sports and surgical sectors. Furthermore, roughly Rs76 billion was lost in form of exemptions to industries under the sixth schedule of the Sales Tax Act.
In addition to this, Rs96.2 billion was lost at the domestic stage and another Rs19.3 billion at the import stage. Moreover, an amount of Rs27.6 billion was lost on account of exemptions on products that are protected under the fifth schedule of the Sales Tax Act.
Additionally, another Rs19.3 billion was lost due to exemptions under the eight schedule of the Sales Tax Act that allows charging goods lower than the standard 17 per cent sales tax.
Documents show that the government sustained losses worth Rs198.15 billion in form of exemptions in customs duty.
Moreover, the Federal Board of Revenue (FBR) failed to collect Rs31.4 billion customs duty on imports into Pakistan from China on the back of preferential exemptions. Subsequently, the government failed to realise another Rs274 million, to be collected as customs duty, from SAARC and ECO countries due to concessional rates on imports.
Furthermore, FBR sustained heavy losses worth Rs1.3 billion, Rs15 million, Rs2.6 billion, Rs2.8 billion and Rs3.8 billion due to exemptions given to SAFTA, Mauritius, Malaysia Sri Lanka and Indonesia on customs duty, respectively.
Economic Survey indicates that the government had given general concessions to the automobile sector, exploration and production companies and all imports under the China Pakistan Economic Corridor (CPEC).
The survey indicates that around Rs2.8 billion has been lost on the back of conditional exemptions in customs duty on import of raw material, Rs4.6 billion due to sales tax exemptions to E&P companies, Rs53 billion towards automotive vendors, Rs1.4 billion on cotton and Rs92 billion in form of concessions under the fifth schedule of customs act, 1969.
Moreover, the economic survey indicates, that income tax worth Rs61.8 billion was exempted during the last 12 months.
The PML-N government gave Rs34.7 billion in income tax exemptions to industrialists in a bid to revive sick industries and replace obsolete machinery and plants. Similarly, another Rs8 billion in income tax concessions were given to businesses under the head of listing companies at the stock market and initiating Greenfield investment projects.
Independent Power Producers (IPPs) were given Rs18 billion income tax exemptions on their earnings from selling electricity. The house building investment scheme also caused a loss of Rs1 billion to the exchequer in form of exemptions.
