ISLAMABAD: The Federal Board of Revenue (FBR) has submitted Statement of Estimated Tax Expenditures of Federal Government for 2019-20 before the Parliament along with other budget documents showing that the tax credit available to companies for enlistment in Stock Exchange caused revenue loss of Rs357 million.
According to the submitted report by the FBR stating that the goods imported under the President/ Prime Minister/ Governors' Salary, Allowances and Privileges Act, 1975 are exempted. The President and the Prime Minister of Pakistan, the Governors and the Acting Governors of the provinces are estimated to get exemption of Rs one million.
The report revealed that the tax credit for Non-profit organizations, trusts or welfare institutions have revenue implications of Rs 21,128 million during 2019-20.
The goods received as gift or donation from a foreign government or organization by the Federal or Provincial Government or any public sector organization or Goods received as gift by Pakistani organizations from Church World Services or the Catholic Relief Services is estimated to get tax exemption of Rs 4 million in outgoing fiscal year.
The total tax exemptions and concessions to various businesses, sectors, charitable organization, investors and Chinese imports have incurred losses to the government exchequer of Rs 1149.95 billion during the fiscal year 2019-20 against Rs 972.4 billion in 2018-19, reflecting an increase of Rs 177.55 billion.
The cost of sales tax exemptions was the highest at Rs 518.814 billion in 2019-20 against Rs 597.7 billion in 2018-19; income tax, Rs 378.03 billion against Rs 141.6 billion; and cost of customs duty exemptions was Rs 253.111 billion in 2019-20 against Rs 233.1 billion in 2018-19.
The FBR has suffered a loss of Rs 118.137 billion due to sales tax exemptions available under the Eight Schedule (Conditional Exemption) of the Sales Tax Act, 1990 during the period of 2019-20 against Rs 156 billion. The revenue loss from conditional exemptions has been reduced by Rs 37.863 billion. Other reduced rates of sales tax have caused revenue loss of Rs 53.138 billion during 2019-20.
The exemption of sales tax on cellular mobile phones under Ninth Schedule of the Sales Tax Act 1990 resulted in revenue loss of Rs 23.154 billion during 2019-20.
On the other hand, the revenue loss on account of rationalisation of corporate tax rate in 2019-20 has not been mentioned in the survey. In 2017-18, the rationalisation of corporate tax rate caused huge revenue loss of Rs 12 billion during this period.
The total revenue loss from zero-rating facility granted to different sectors under Fifth Schedule of the Sales Tax Act 1990 amounted to Rs 13.671 billion during the period under review against Rs 54.09 billion in 2018-19, reflecting a negative growth of Rs 40.419 billion.
The concessions under Fifth Schedule of the Customs Act 1969 caused revenue loss of Rs 87.859 billion in 2019-20 as compared to Rs 99.558 billion in 2018-19, reflecting an increase of Rs 145.275 billion.
The exemption of Additional Customs Duty caused revenue loss of Rs 4.773 billion and exemption from Regulatory Duties resulted in revenue loss of Rs 9.390 billion during the period under review.
The exemption of customs duty for vendors of automotive sector caused revenue loss of Rs 26.604 billion in 2018-19 as compared to Rs 18.899 billion in 2017-18, showing an increase of Rs 7.705 billion.
The exemption of customs duty for OEMs of automotive sector caused revenue loss of Rs 38.818 billion in 2018-19 as compared to Rs 35.030 billion in 2017-18, reflecting an increase of Rs 3.788 billion.
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