Govt Suffered Massive Revenue Loss Due to Tax-Related Exemptions

The government has suffered a massive revenue loss of Rs. 1,314.3 billion during 2020-21 on account of the grant of sales tax, income tax, and customs duty-related tax exemptions as compared to Rs. 1,149.95 billion in 2019-20, showing a growth of 14.36 percent.

The Economic Survey 2020-21 released the data on the tax expenditure and the impact of the exemptions yesterday (Thursday).


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It disclosed that the cost of sales tax exemptions was Rs. 578.456 billion in 2020-21 against Rs. 518.814 billion in 2019-20, showing an increase of Rs. 59.642 billion; income tax, Rs. 448.046 billion against Rs. 378.03 billion, showing an increase of Rs. 70.016 billion, and the cost of customs duty exemptions was Rs. 287.771 billion in 2020-21 against Rs. 253.111 billion in 2019-20, depicting an increase of Rs. 34.66 billion.

In the budget 2020-21, the government had announced relief measures of Rs. 49.3 billion. The customs duty relief measures stood at Rs. 25 billion. The Inland Revenue (sales tax, income tax, and federal excise duty) relief measures amounted to Rs. 26 billion; the Inland Revenue taxation measures stood at Rs. 1.7 billion, and the net impact of the Inland Revenue measures has come to Rs. 24.3 billion. Therefore, the total net impact of the relief measures totalled Rs. 49.3 billion for 2020-21.


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Last year, the Federal Board of Revenue (FBR) high-ups had estimated that the tax machinery could generate 200 billion to 300 billion rupees through the effective enforcement and broadening of the narrowed tax base in 2020-21.