The annual cost of tax exemptions increased by Rs. 443 billion (33 percent) to Rs. 1.757 trillion during the outgoing fiscal year 2021-22 as compared to Rs. 1.314 trillion in the previous year, according to the Pakistan Economic Survey (PES) 2021-22.
These tax concessions were almost double the Rs. 900 billion allocated for the Public Sector Development Program (PSDP) for the fiscal year 2021-22.
The tax expenditures have been estimated at Rs. 1.757 trillion on account of income tax, sales tax, and customs duty concessions in the fiscal year 2021-22.
According to the PES, the government increased tax concessions on sales tax by Rs. 436 billion (75 percent) to Rs. 1014 billion during the outgoing fiscal year as compared to Rs. 578 billion in the previous year.
Out of total tax exemptions given in sales tax, the government lost revenue of Rs. 353 billion through the exemption which was given under the 6th Schedule on (Imports) which is mainly due to withdrawal of sales tax on petroleum products. The loss to the national exchequer through exemptions under the 6th Schedule on local supplies increased by Rs. 77.6 billion to Rs. 233.5 billion during the outgoing fiscal year compared to Rs156.1 billion during the previous year.
The tax concessions on customs duty increased by Rs. 55 to Rs. 343 billion during the outgoing fiscal year compared to Rs. 288 billion during the previous year.
The government, however, reduced the concession in income tax by Rs. 48 billion to Rs. 399.66 billion during the outgoing fiscal year compared to Rs. 448 billion during the previous year.
