ISLAMABAD   -  The federal government has once again provided massive tax exemption worth Rs1.314 trillion to the various sectors in the current fiscal year.

The volume of tax exemptions have exceeded to Rs1.314 trillion in the year 2020-21 as compared to Rs1.15 trillion in the previous year, according to the latest Economic Survey of Pakistan, which was released on Thursday. 

The Economic Survey showed that government had given Income Tax exemptions worth of Rs448.05 billion in FY21 as compared to Rs 378.03 billion in the last year.

Meanwhile, the cost of sales tax exemptions has been estimated to be Rs 578.46 billion in FY21 as against Rs518.8 billion of the previous and. Meanwhile, the cost of customs exemptions has been projected at Rs287.77 billion in present financial year, which was Rs253.11 billion during FY20.

In Income Tax, the government has given exemptions worth of Rs37.318 billion in allowances, Rs105.342 billion in tax credits, Rs267.115 billion exemptions from total income, Rs124 billion in reduction in tax rates, Rs2.839 billion in reduction in tax liability, Rs2.687 billion exemption from specific provisions of the Income Tax and Rs32.621 billion from others/miscellaneous during the year 2020-21.

The government has given sales tax exemptions worth ofRs578.456 billion in FY21, which was Rs518.8 billion in FY20.

According to the survey, tax exemption under zero rating under fifth schedule to Sales Tax Act 1990 is Rs12.887 billion, exemption under 6th schedule on (Imports) is Rs173.808 billion, exemption under 6th Schedule on local supplies is Rs156.134 billion, reduced rates under 8th schedule (2pc) is Rs90.288 billion, reduced rates under 8th schedule (5pc ) is Rs27.108 billion, reduced rates under 8th schedule (7pc) is Rs496 million, reduced Rates Under 8th Schedule (8pc) is Rs1.396 billion, Reduced Rates Under 8th Schedule (10pc) is Rs69.592 billion, Reduced Rates Under 8th Schedule (12pc) is Rs19.321 billion and Rs27.096 billion as Sales Tax on Cellular mobile Phones under 9th Schedule.

The customs exemptions surged toRs287.77 billion in FY21 from Rs Rs253.111 billion in FY20. The increase was mostly on account of Preferential Trade Agreements (PTAs) and Free Trade Agreements. FTA & PTA Exemptions cost Rs34.21 billion. 5th Schedule Exemptions & Concessions cost Rs137.4 billion and Rs55.877 billion as General Concessions: Automobile sector, E&P Companies, CPEC, etc and Rs47.631 billion as Export Related Exemptions.

According to the Economic Survey, the FBR tax collection achieved double-digit growth in the first 10 months of the current fiscal year and surpassed the target by more than 100 billion.

The provisional net collection grew by 14.4 percent to Rs 3,780.3 billion during July-April, FY2021 against Rs 3,303.4 billion in the same period last year. The tax collection has witnessed a broad-based increase in all its revenue heads during the period under review.

COVID-19 pandemic had a significant impact on the national economy and the revenue collection efforts of FBR. Keeping in view the negative impact of COVID-19 on the economy the yearly target of the current fiscal year has been reduced downward from Rs 4,963 billion to Rs 4,691 billion, which means Rs 272 billion lesser than the original target.