Former Federal Minister for Trade and Commerce Humayun Akhtar Khan has said that the government’s decision to withdraw tax exemptions would have a negative impact on the economy.

Talking to a private channel, Akhtar said that the tax exemptions were given to the construction and IT sector for the purpose of incentivizing them, so that new factories are built and the capacity is enhanced. “There is a reason that as per IMF’s latest projections, India’s GDP this year is expected to grow by 11.5 percent, Bangladesh GDP is projected to grow by 4.5pc, whereas Pakistan GDP will grow by 1.5pc. Countries across the world are increasing incentives to revive the businesses because of extraordinary times,” he said.

Akhtar said unfortunately Pakistan is moving in an opposite direction. “I think this will have a negative impact on Pakistan’s economy,” he said.

Federal Board of Revenue (FBR) Chairman Javed Ghani Tuesday said the government would withdraw corporate income tax exemptions within the range of Rs70 to Rs140 billion through the proposed Income Tax (Second Amendment) Bill, 2021.

Sharing details of the bill, he said that the FBR has estimated an amount of Rs70 to Rs 140 billion from these exemptions, but it depends on how the economy would behave in the future.

He clarified that all these measures of withdrawal of exemptions would be applicable from July 1, 2021. There would be no impact of these exemptions in the next 3-4 months. The impact of the withdrawal of exemptions would be applicable during the whole next fiscal year.

Meanwhile, Akhtar said that Pakistan IT industry is already way backward in the region as compared to neighboring India and other countries, which are giving incentives to the IT sector. Talking about the REIT industry, Akhtar that REIT was unable to take off in Pakistan for the past 10 years.

He pointed out that Pakistan’s problem is its low Tax to GDP ratio, which in the past two years has declined further.