Total tax exemptions and concessions to various sectors, lobbies/groups and investors cost the national exchequer Rs 477.1 billion during 2013-14 against Rs 239.5 billion in 2012-13, reflecting an extraordinary increase of Rs 237.6 billion. The Economic Survey (2013-14) released here on Monday disclosed that the tax expenditure for 2013-2014 has been worked out at Rs 477.1 billion. The cost of tax exemptions of sales tax, income tax and customs duty has been increased by Rs 237.6 billion in 2013-14 when compared with 2012-13. Six sales tax statutory regulatory orders caused a cumulative loss of Rs 230 billion in 2013-14 which is higher than the total income tax expenditure of Rs 96.634 billion. The cost of sales tax exemptions totalled at Rs 249 billion in 2013-2014 against Rs 37.436 billion in 2012-13; income tax, Rs 96.6 billion against Rs 82.393 billion and cost of custom duty exemptions was Rs 131.451 billion in 2013-2014 against Rs 119.706 billion during the corresponding period of last fiscal. The sales tax exemption SROs resulted in major increase in revenue loss to the national exchequer during 2013-14. The cost of tax exemptions has been considerably increased due to the sales tax exemption SROs during 2013-14. The Economic Survey disclosed the FBR has suffered massive revenue loss of Rs 19 billion due to sales tax exemptions and zero-ratings available through Export Facilitation Schemes during 2013-14. The sales tax statutory regulatory orders (SROs) caused huge revenue loss of Rs 230 billion to the national kitty during this period. Sales tax concessions available to the five leading export oriented sectors ie textile, leather, carpets, surgical and sports goods caused revenue loss of Rs 65 billion in 2013-14. The exemption of customs duty on the imports from China under different notifications caused accumulative revenue loss of Rs 21.464 billion during 2013-14. The general and conditional exemption of customs duty (non-survey) caused huge revenue loss of Rs 32.515 billion. The income tax exemption granted to the Independent Power Producers caused revenue loss Rs 52.030 billion in 2013-14 against Rs 48.600 billion in 2013-14, reflecting an increase of Rs 3.43 billion. The FBR has not specified any revenue loss to the exemptions within the federal excise regime, reflecting no loss occurred on this account. However, importers, investors and local manufactures have availed concessions and exemption of Rs 131.451 billion under different notifications of customs duty and free trade agreements during 2013-2014 against Rs 119.706 billion in 2012-13. On the direct taxes side, the revenue loss on account of capital gains has decreased from Rs 15 billion in 2012-13 to Rs 5 billion in 2013-14. The revenue loss on account of capital gains has been decreased by Rs 10 billion in 2013-14 when compared with 2012-13. The cost of sales tax exemptions has been worked out and is estimated to be Rs 249 billion for the fiscal year 2013-14. Followings are the main exemptions in sales tax and their cost of exemptions during 2013-2014: SRO.727(I)/2011 (plant and machinery) resulted in revenue loss of Rs 14 billion. SRO.1125(I)/2011 relating to concessionary rate of sales tax on raw materials, intermediary inputs and finished goods relating to textiles, carpets, leather, sports and surgical sectors, caused huge revenue loss of Rs 65 billion to the national exchequer. SRO.549(I)/2008 (zero percent sales tax on specified goods) resulted in revenue loss of Rs 94 billion; SRO.575(I)2006 (machinery, equipment, apparatus and items of capital goods) caused revenue loss of Rs 30 billion. SRO.551(I)/2008 (exemption from sales tax on import and supply of certain items) caused loss of Rs 26 billion to the kitty in 2013-14. SRO.69(I)2006 (levy of sales tax at the rate of 14 percent on rapeseed) caused loss of Rs 1 billion. Export Facilitation Schemes caused accumulative revenue loss of Rs 19 billion to the national kitty in 2013-14. SRO.450(I)/2011 (DTRE&MB) resulted in revenue loss of Rs 14 billion; SRO.326(I)2008 (EOU) loss Rs 1 billion and SRO.492(I)2009 (temporary scheme & same state goods) caused huge revenue loss of Rs 4 billion. The cost of income tax exemptions has been increased to Rs 96.634 billion in 2013-2014 against Rs 82.393 billion in 2012-13. Major income tax exemptions included exemptions related to pensions/gratuity; income from funds, board of education, universities and computer training institutions; donations and contributions to charitable organisations; Independent Power Producers; income from certain trust, welfare and charitable institutions non-profit organizations; profits on debt/interest from government securities and certain foreign currency accounts/books profit on debt; export of Information Technology; capital gains and other sector and enterprise specific exemption. The government has also suffered a loss Rs 52.030 billion in 2013-2014 against Rs 48.600 billion in 2012-13 due to income tax exemption available to Independent Power Producers. The data showed that the IPPs have availed income tax exemption to the tune of over Rs 52 billion during 2013-14 against Rs 48.600 billion in 2012-13. The income tax exemption to pensioners cost Rs 1 billion in 2013-2014 against Rs 0.800 billion in 2012-13; income from funds, board of education, universities and computer training institutions Rs 11.100 billion against Rs 9.100 billion; donations and contributions to charitable organisations Rs 2.500 billion against Rs 1.300 billion; income from certain trusts, welfare and charitable institutions and non-profit organisations Rs 1.910 billion against Rs 0.600 billion; profits on debt/interest from government securities and certain foreign currency accounts/books/profits on debt Rs 4.100 billion against Rs 2 billion; export of Information Technology Rs 0.994 billion against Rs 0.993 billion and other sector and enterprise specific exemption caused revenue loss of Rs 18 billion in 2013-2014 against Rs 15 billion in 2012-13. The customs duty related notifications caused an accumulative loss of Rs 131.451 billion in 2013-14 against Rs 119.706 billion in 2012-13, showing an increase of Rs 11.745 billion. Customs exemptions are given on raw materials and components; plant, machinery and equipment imported by the industries particularly export oriented sectors. Some of these exemptions are due to international bilateral/multilateral agreements with out trading partners like China, Malaysia and SARRC countries. Under the Customs law, exemptions or concessions are granted to goods that are imported into Pakistan through SROs, special classification in Chapter 99 of Pakistan Customs Tariff, and/or through specific rate of tariff. On the basis of these provisions, the tax expenditure in respect of Customs Duty has been estimated at Rs 131.451 billion for 2013-14. The concession of customs duty on goods imported from SAARC and ECO countries caused revenue loss to the tune of Rs 290.3 million in 2013-2014. The customs duty exemption on the imports from China under SRO.1296(I)/2006 of caused revenue loss of Rs 12.1 million. The customs duty exemption on the imports from Iran under Pak-Iran PTA caused loss of Rs 22.3 million. The customs duty exemption on the imports under the SAFTA agreement caused revenue loss of Rs 796.2 million during 2013-2014. The exemption of customs duty on the imports from China under another SRO.659(I)/2007 resulted in revenue loss of Rs 21.464 billion in 2013-14 against Rs 21.932 billion during 2012-13. The customs duty exemption on the imports from Malaysia caused revenue loss of Rs 2.909 billion in 2013-14. The conditional exemption of customs duty on import of raw materials and components etc. for manufacture of different sectors under SRO.565(I)/2006 resulted in revenue loss of Rs 10.761 billion in 2013-2014 against Rs 9.16 billion during the corresponding period last fiscal. The general and conditional exemption of customs duty under SRO.567(I)/2006 cost revenue loss of Rs 32.515 billion in 2013-2014 against Rs 28.138 billion in 2012-13. Similarly, exemption of customs duty and sales tax on the import of machinery, equipment and vehicles by the Exploration and Production (E&P) companies (SRO.678(I)/2004) caused a loss of Rs 6.714 billion against Rs 6.11 billion in the same period last fiscal. The concession of customs duty on the import of specific items under SRO.575(I)2006 resulted in revenue loss of Rs 21.780 billion during 2013-2014 against Rs 18.506 billion during 2012-13 during same period last fiscal. The exemption of customs duty for vendors of automotive sector caused revenue loss of Rs 11.471 billion during 2013-2014 against Rs 11.052 billion in the corresponding period of last fiscal. The exemption of customs duty for OEMs of automotive sector caused revenue loss of Rs 17.823 billion during 2013-2014 against Rs 19.302 billion in 2012-13. The exemption of customs duty on the import of machinery and equipment by industrial units registered with the Ministry of Textile Industry caused revenue loss of Rs 2.646 billion during 2013-14 against Rs 1.495 billion in 2012-13. The exemption from customs duty on imports from Indonesia under the Pak-Indonesia PTA caused revenue loss of Rs 1.508 billion in 2013-14. brecorder/taxation/181:pakistan/1188847:tax-exemptions-cost-exchequer-rs-4771-billion/?date=2014-06-03
Posted on: Tue, 03 Jun 2014 06:41:09 +0000
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