Islamabad, June 19, 2023 – The Federal Board of Revenue (FBR) has announced that the cost of exemptions and concessions in Pakistan expanded to 3.36 percent of the GDP during the fiscal year 2021-2022.
This represents an increase from the previous fiscal year, 2020-2021, when the tax expenditure stood at 2.69 percent.
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Based on the data relating to FY2021-22, the total expenditure on Federal Taxes is estimated at Rs. 2,239.63 billion. The breakdown of tax-wise expenditures is as follows:
01. Income Tax: Rs. 423.89 billion (6.89 percent of total FBR tax collection, 18.93 percent of total expenditure, and 0.64 percent of GDP)
02. Sales Tax: Rs. 1,294.04 billion (21.05 percent of total FBR tax collection, 57.78 percent of total expenditure, and 1.94 percent of GDP)
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03. Customs Duty: Rs. 521.70 billion (8.49 percent of total FBR tax collection, 23.29 percent of total expenditure, and 0.78 percent of GDP)
The total expenditures amount to 36.43 percent of the total FBR tax collection in FY 2021-22.
The increase in tax exemption and concession expenditure reflects the government’s efforts to stimulate economic growth and provide relief to specific sectors. However, it is essential to carefully balance these measures to ensure sustainable revenue generation and minimize the impact on the overall fiscal health of the country.
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The FBR continues to monitor and evaluate tax expenditures, aiming to strike a balance between promoting economic activity and maintaining fiscal discipline. By conducting regular assessments, the FBR can make informed decisions to optimize tax policies and ensure the efficient utilization of resources.
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As Pakistan strives for economic stability and growth, it becomes imperative to review tax exemptions and concessions regularly to align them with national development goals and maintain a fair and transparent tax system. The government’s ongoing efforts in this regard are crucial for fostering a robust and sustainable economic environment.
