Pakistan’s tax exemptions cost exchequer Rs3.879 trillion

ISLAMABAD: Tax exemptions surged to Rs3.879 trillion during the fiscal year 2023-2024, significantly impacting the national exchequer, according to the Pakistan Economic Survey 2023-24.

The report, unveiled by Finance Minister Muhammad Aurangzeb, highlighted the rising cost of tax exemptions, particularly due to substantial relief provided on petroleum products (PoL) and the automobile sector.

The survey detailed how the government has granted extensive exemptions to various industries and groups, resulting in considerable revenue foregone.

During the outgoing fiscal year, substantial relief was given not only on PoL products but also in general exemptions, including those related to the automobile sector, CPEC projects, and both export and local supplies.

Income tax exemptions alone amounted to Rs476 billion, encompassing reductions on government income, deductible allowances, tax credits, and specific provisions. Sales tax exemptions reached a staggering Rs2.8 trillion, driven primarily by exemptions under the sixth schedule on imports and zero-rating under the fifth schedule.

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Additionally, customs exemptions were recorded at Rs543 billion, which included significant relief under various chapters and schedules, particularly benefiting the automobile sector and CPEC-related imports.

Overall, the government’s provision of tax exemptions in the financial year 2023-24 included Rs476 billion in income tax, Rs2.858 trillion in sales tax, and Rs543 billion in customs duty, underscoring the immense fiscal impact of these policies on the national economy.