The total tax exemptions and concessions to various sectors and investors will have to cost the government Rs 166.772 billion during 2010-2011 as against Rs 150.291 billion in 2009-2010; it reflects an obvious increase of Rs 16.481 billion.
The Economic Survey (2010-2011) released here on Thursday disclosed that the sales tax exemption caused revenue loss of Rs 25.323 billion in 2010-2011 as against Rs 27.409 billion in 2009-2010; income tax-Rs 46.508 billion as against Rs 46.534 billion and cost of customs duty exemption was Rs 94.941 billion in 2010-2011 as against Rs 76.348 billion during the corresponding period of last fiscal year.
The Economic Survey has not specified any revenue loss to the exemptions within the federal excise regime, reflecting no loss on this account. However, importers, investors and local manufactures have availed themselves concessions and exemptions of Rs 94.941 billion under different notifications of customs duty during 2010-2011 as against Rs 76.348 billion in 2009-2010.
On the direct taxes'' side, the government has suffered a major loss of Rs 21.840 billion due to the exemption of capital gains during current fiscal period as against Rs 21.910 billion in the same period of 2009-2010. Previously, sales tax exemptions were on tractors, fertilisers, pharmaceuticals, pesticides, etc.
However, the Federal Government rationalised the extent of exemptions and from March 15, 2011, onwards tractors, pesticides and fertilisers were chargeable to sales tax. The cost of sales tax exemptions has accordingly been worked out and is estimated to be Rs 25.323 billion for the fiscal year 2010-11.
Following are the main exemptions in sales tax and their cost during 2009-10 and 2010-11: The revenue loss on account of exemptions on pharmaceutical products is Rs 4.129 billion in 2010-2011 as against Rs 3.754 billion in the same period of the last fiscal one. Exemptions on tractors caused a loss of Rs 4.867 billion as against Rs 6.246 billion; fertilisers, Rs 6.854 billion against Rs 8.797 billion and exemptions to items falling within the category of "others" caused a loss of Rs 9.473 billion as against Rs 8.612 billion in 2009-2010.
The cost of income tax exemptions is Rs 46.508 billion in 2010-2011 as against Rs 46.534 billion during the period under review. 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 organisations; profits on debt/interest from government securities and certain foreign currency accounts/books, profit on debt earned by certain non-resident individuals and institutions, export of Information Technology, capital gains and other sector and enterprise specific exemption.
The government has also suffered a loss of Rs 0.870 billion in 2010-2011 as against Rs 0.852 billion in 2009-2010 due to income tax exemption available to Independent Power Producers.
The income tax exemption to pensioners cost Rs 0.087 billion in 2010-2011 as against Rs 0.075 billion in 2009-2010, income from funds, board of education, universities and computer training institutions Rs 0.979 billion as against Rs 0.950 billion, donations and contributions to charitable organisations Rs 0.649 billion as against Rs 0.630 billion; income from certain trusts, welfare and charitable institutions and non-profit organisations Rs 1.360 billion as against Rs 1.350 billion; profits on debt/interest from government securities and certain foreign currency accounts/books/profits on debt earned by certain non-resident individuals and institutions Rs 0.049 billion as against Rs 0.050 billion, export of Information Technology Rs 0.724 billion as against Rs 0.812 billion and other sector and enterprise specific exemption caused revenue loss of Rs 19.905 billion in 2010-2011 as against Rs 19.905 billion in 2009-2010.
The customs duty related notifications caused an accumulative loss of Rs 94.941 billion in 2010-2011 as against Rs 76.348 billion in 2009-2010. Customs exemptions are given on raw materials and components, plant, machinery and equipment imported by the high-tech, priority and value added industries, imports for energy sector projects and exemption to exploration and production companies. Some of these exemptions are due to international contractual obligations.
The concession of customs duty on goods imported from SAARC and ECO countries caused revenue loss to the tune of Rs 0.073 billion in 2010-2011 as against Rs 0.104 billion in 2009-2010. The customs duty exemption on the imports from Sri Lanka resulted in revenue loss of Rs 0.148 billion against Rs 0.152 billion. The customs duty exemption on the imports from China under SRO.1296(I)/2006 of caused revenue loss of Rs 0.031 billion during 2010-2011 against Rs 0.073 billion in 2009-2010. The customs duty exemption on the imports from Iran under Pak-Iran PTA caused a loss of Rs 0.004 billion as against Rs 0.005 billion. The customs duty exemption on the imports under the SAFTA agreement caused revenue loss of Rs 0.116 billion during 2010-2011 as against Rs 0.090 billion in 2009-2010. The exemption of customs duty on the imports from China under another SRO.659(I)/2007 resulted in revenue loss of Rs 10.867 billion in 2010-2011 as against Rs 6.069 billion during 2009-2010. The customs duty exemption on the imports from Malaysia caused revenue loss to the tune of Rs 2.895 billion during 2010-2011 against Rs 2.221 billion in the same period of previous fiscal.
The conditional exemption of customs duty on import of raw materials and components, etc, for manufacture of different sectors resulted in revenue loss of Rs 4.653 billion in 2010-2011 against Rs 4.315 billion during the last corresponding fiscal period.
The general and conditional exemption of customs duty under SRO.567(I)/2006 cost revenue loss of Rs 30.277 billion in 2010-2011 as against Rs 22.566 billion in 2009-2010. Similarly, exemption on customs duty and sales tax on the import of machinery by the Exploration and Production (E&P) companies (SRO.678(I)/2004) caused a loss of Rs 2.581 billion as against Rs 4.831 billion in the same period of the last fiscal one.
The concession of customs duty on the import of machinery, equipment and apparatus resulted in revenue loss of Rs 13.712 billion during 2010-2011 as against Rs 11.980 billion during 2009-2010 in the same period of the last fiscal one.
The exemption of customs duty for vendors of automotive sector caused revenue loss of Rs 9.315 billion during 2010-2011 as against Rs 4.933 billion in the corresponding period of the last fiscal one. The exemption of customs duty for OEMs of automotive sector caused revenue loss of Rs 19.073 billion during 2010-2011 against Rs 18.378 billion in 2009-2010. 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 1.196 billion as against Rs 0.630 billion in 2009-2010.
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