Cash-strapped govt doles out Rs2.2tr in tax discounts

Federal Board of Revenue’s (FBR) tax exemptions reached an all-time high of Rs2.239 trillion in the outgoing fiscal year, up 51 per cent from Rs1.482tr in FY22, showed the Pakistan Economic Survey 2022-23 released by Finance Minister Ishaq Dar on Thursday. The government claims that it has met all conditions set out by the International Monetary Fund to unlock the stuck-up funding under the $7bn programme, but the surging tax exemptions have been a key area of concern for the fund. The cost of tax exemptions has risen for the fifth year in a row. This is mainly due to exemptions on raw materials and semi-finished products, as well as specific sectors aimed at reducing input costs for export-oriented industries. Additionally, certain individuals receive tax exemptions on particular perks and privileges. The value of tax exemptions has been increasing over the years. In FY18 it was Rs540.98bn, rising to Rs972.4bn in FY19, Rs1.49tr in FY20, Rs1.314tr in FY21 and Rs1.757tr in FY22. This increase is largely due to tax concessions given to all sectors to promote industrialisation.