Tax Expenditure Report 2025: Major beneficiary sectors of tax relief listed

ISLAMABAD: Major beneficiary sectors of income tax exemptions/concessions and reduced rates are pension, social security, energy & mining, financial sector, education sector, donations/charities, tribal areas, Information Technology, salaried class and health sectors during 2023-24.

Moreover, income tax concessions covering allowances, credits, exemptions, reduced rates and exclusions also major part of the major income tax expenditure.

The list of major beneficiary sectors under Income Tax Expenditure has been given in the new “Tax Expenditure Report 2025” issued on Monday.

Income Tax Expenditure (cost of exemption) estimated at Rs476.96bn

The report made an interesting observation that there is no sales tax exemption available to the consumers of the POL products as the petroleum products are charged with Petroleum Development Levy (PDL).

According to the report, the Income Tax Expenditure for 2023-24 is estimated at Rs. 545.229 billion. This expenditure includes various forms of tax concessions, such as allowances, credits, exemptions, reduced rates, and exclusions. In 2023-24, Income Tax expenditure accounted for 22.39 percent of the total tax expenditure. When measured as a percentage of GDP, Income Tax expenditures decrease from 0.57 percent in FY 2022 to 0.52 percent in FY 2023-24.

The report disclosed that the Sales Tax Expenditure for FY 2023-24 is estimated at Rs. 1,237.11 billion, reflecting a decrease of 18.61 percent compared to FY 2022-23. This expenditure represents 1.18 percent of GDP in FY 2023-24. Furthermore, Sales Tax expenditure constitutes the largest portion ofthe total tax expenditure, accounting for 50.81 percent.

Copyright Business Recorder, 2025