ISLAMABAD: The total tax exemptions, concessions and special tax treatments to various businesses, sectors/industries, lobbies/ groups and investors have cost the government Rs2.239 trillion during the fiscal year 2022-23, against Rs 1.757 trillion in 2021-22, reflecting an increase of Rs482.63bn.
The cost of tax exemptions registered a growth of 27.4 percent during 2022-23 as compared to tax expenditure in 2021-22.
The Economic Survey 2022-23 released on Thursday disclosed that the single-largest contributor to the surge in sales tax exemptions was the exemption from sales tax on POL Products Through Various SROs, showing a massive revenue loss of Rs 632.9bn during 2022-23.
Similarly, sales tax exemption under Sixth Schedule on (Imports) caused a loss of Rs 257.5 bn, Zero Rating under Fifth Schedule to Sales Tax Act 1990 Rs 139 bn, Exemption under Sixth Schedule on Local Supplies Rs 133.1 bn, Reduced Rates Under Eighth Schedule Rs 129.9 bn and sales tax exemptions on Cellular Mobile Phones under Ninth Schedule a revenue loss of Rs1.021 bn in 2022-23.
Overall, the government has given Rs 1294 bn sales tax exemptions in 2022-23.
The exemption of customs duty available under General Concessions: Automobile sector, E&Ps, CPEC, etc have caused a revenue loss of Rs192 bn during 2022-23. Â
The exemptions & concessions under the Fifth Schedule of the Customs Act, 1969 caused a revenue loss of Rs 172.9 bn.
The FBR has also suffered a massive revenue loss of Rs 102 bn during 2022-23 on account of tariff concessions and exemptions available under Free Trade Agreements (FTAs) and the Preferential Trade Agreements (PTAs).
The export-related exemptions cost revenue loss of Rs30.8 billion while exemptions under Chapter-99 caused a loss of Rs 22 bn to FBR in 2022-23.
Overall, tax exemptions under customs act 1969 cost the government Rs521.7 bn in 2022-23.
On the other hand, the cost of income tax exemptions was increased from Rs 399.662 bn in 2021-22 to Rs 423.8 bn in 2022-23.
The income tax exemption from Part I of Second Schedule of ITO, 2001 cost FBR Rs232.3 bn, Exemption from Specific Provisions given in Part IV of Second Schedule of ITO 2001 Rs 68.8 bn, Exemptions and Tax Concessions given in Part VII of Chapter III of ITO, 2001 Rs26.8 bn, Tax Credits given in Part X of Chapter III of ITO 2001 Rs52.1 bn, Deductible Allowances are given in Part IX of Chapter III of ITO, 2001 Rs14.5 bn and reduction in tax Liability given in Part III of Second Schedule of ITO, 2001 has caused a revenue loss of 4.738 bn in 2022-23.
