- The exemption of sales taxes on oil products contributes to the increase in cost.
- Exemptions amounts to Loss of income of RS1,496,124m in fiscal year 2000.
- FBR suffered a remarkable loss of income from RS985,594 billion in 2024-25.
Islamabad: In addition to the lost growth objective, the economic survey of Pakistan 2024-25 presented by the Government has revealed that the exemption and total tax concessions of Pakistan distributed to several sectors of the economy has risen to RS5.85 billion in fiscal year 2024-25, The news reported on Tuesday.
Revealing the survey report, although the Minister of Finance, Muhammad Aurengzeb, said that the number of individual tax files had doubled, did not answer the question about the increase in the cost of fiscal exemptions despite the statements that they were being consistent in recent years.
It is pertinent to take into account that the total cost of fiscal exemptions has increased to RS5.84 billion in 2024-25 against RS3.87 billion in 2023-24, which reflects an increase of RS1.96 billion. The cost of tax exemptions witnessed a 50% increase for 2024-25 compared to fiscal spending in 2023-24.
The exemption of sales tax on oil products, import tax concessions, reduced sales fees on sales and general tax exemptions on imports on imports and local supplies contributed to the main costs of exemptions during 2024-25. However, the economic survey did not incorporate the exemption cost provided to the Fata/Pata areas.
The largest taxpayer for the increase in sales tax exemptions was the exemption of sales tax on oil products through legal regulatory orders (SRO), which shows a massive loss of income of RS1,496.124 million during 2024-25. The exemption of sales tax on the importation of oil derived products caused a loss of income of RS299,640 million during this period.
The fixed sales tax regime on cell mobile phones caused a loss of income of RS87.950 million in 2024-25 compared to RS33,057 million in 2023-24, which shows an increase of RS54,893 million.
The Federal Income Board (FBR) suffered a loss of income from RS372 billion on account of the exemption of imports on imports during 2024-25 compared to RS214 billion for 2023-24, reflecting an increase of RS158 billion.
The exemption of sales tax in local supplies caused a loss of income of RS613 billion in 2024-25 compared to RS461 billion in 2023-24, which reflects an increase of more than RS152 billion. The cost of income tax exemptions amounted to 800.8 billion against RS476.9 billion, which shows an increase of RS323.99 and the cost of exemptions of customs rights was 785.8 billion in 2024-25 against RS543.5 billion in 2023-24, which reflects an increase of RS242.3 billion RS242.3.
The economic survey does not mention the loss of income due to exempt commercial income granted to independent energy producers (IPP). Similarly, the survey does not mention any loss of income from capital gains. The accumulated loss of income due to tax credits amounted to RS101 billion in 2024-25 against RS24.374 billion in 2023-24, showing an increase of RS76,627 billion.
The exemption of income tax of the special provisions of the Income Tax Ordinance has caused a loss of income of RS52 billion for 2024-25 compared to RS62,756 billion for 2023-24. The exemption of total income tax tax has an income impact of RS443,445 billion during the period under review.
The exemption of the Income Tax available for deductible allocations caused a loss of income of RS16.4 billion in 2024-25 against RS5.912 billion in 2023-24, which shows an increase of RS10.488 billion.
The reduction in income tax rates has revenue implications of RS45 billion for 2024-25 compared to RS25.492 billion in 2023-24, which shows an increase of RS19.508 billion.
The FBR has suffered a massive loss of income from RS985,594 billion in 2024-25 compared to RS675 billion in 2023-24 due to tax exemptions on sales available under the sixth calendar (exemption program) of the Sales Tax Law. The loss on account of the exemption of sales tax (import and national stage) has increased by almost RS985 billion.
The total loss of income of the zero classification installation granted to several sectors under the fifth schedule of the Sales Tax Law, 1990, amounted to RS683.429 billion during the period under review against RS206.053 billion in 2023-24, reflecting an increase of RS4777.376 billion.
The FBR has not specified any loss of income for exemptions within the federal special tax regime, which reflects that there was no loss in this account. The cost of income tax exemptions was RS800.8 billion in 2024-25 against RS476,960 billion in 2023-24, which reflects an increase of RS323.84 billion.
The cost of exemptions with respect to customs duty has been calculated at RS785.9 billion in 2024-25 compared to RS543,521 billion in 2023-24, which reflects an increase of RS242.379 billion.
The FBR has suffered the loss of income of RS61 billion in 2024-25 against RS44.107 billion in 2023-24 due to tariff concessions and exemptions available under free trade agreements (FTA) and preferential trade agreements (PTA). The loss of income has increased by RS17 billion.
The exemption of customs duty in the articles by the automobile sector, exploration and production companies (E & P), general concessions and CPEC caused a loss of RS133,236 billion in 2024-25 against RS146.598 billion in 2023-24, showing a decrease of RS13.362 billion.
