ISLAMABAD: The reduction in tax rates including withholding tax on the import of sugar is one of the reasons for huge cost of income tax exemptions during 2021-22.
The tax expenditure report-2023 issued by the Federal Board of Revenue (FBR) revealed that income tax expenditures are classified into various types of measure, i.e., allowances, credits, exemptions, reduced rates, exclusion, etc. Overall income tax expenditure accounted for 18.93% of the total expenditure in 2021-22.
Income tax related tax expenditures are higher by 1.77% during 2021-22 as compared to 2020-21. Major chunk of income tax exemptions pertains to incomes exempt from tax given in Part I of Second Schedule (54.82%), followed by specific provisions (16.24%) and tax credits (12.30%).
A substantial jump has been noted in tax expenditure on account of reduction of rates mainly because of non-availability of data on certain clauses and addition of some clauses through Finance Act, 2021 related to reduction in rates on import of sugar.
Under the FBR notifications, in respect of import of white sugar from August 25, 2020 to the November 15, 2020 both days inclusive, tax under section 148 was collected at the rate of 0.25% as per quantity, quality, mode and manner prescribed by Ministry of Commerce during the said period. Tax under section 148 on commercial import of the white sugar was collected at the rate of 0.25% from January 26, 2021 till the June 30, 2021.
Subject to quota allotment by Commerce Division, tax under section 148 shall be collected at the rate of 0.25% on import of raw sugar imported by sugar mills from January 26, 2021 to June 30, 2021 both days inclusive provided that such imports shall not exceed fifty thousand metric tons per sugar mill and three hundred thousand metric tons in aggregate by the sugar industry, FBR added.
Copyright Business Recorder, 2023