ISLAMABAD, June 4: The revenue loss to the national exchequer because of major tax exemptions, particularly in the customs duty, widened by 25.5 per cent to Rs24.851 billion in the year 2004-05 against Rs19.802 billion over the corresponding year.
The Economic Survey Report 2004-05 released here on Saturday indicated that as compared to the last few years, this year the cost of exemption in taxes had registered a massive growth because of exemption of raw materials and machinery from the customs duty in the budget 2004-05.
However, the government has reduced the cost of exemption in income tax and sales tax by withdrawing tax exemptions on certain areas or rationalizing the duty structure on them.
With these measures, the exemptions available under customs increased by 181.4 per cent to Rs12.38 billion during the year 2004-05 as against Rs4.4 billion in the corresponding year.
Further break-up showed that exemptions in the customs duties available under different SROs showed Rs7.429 billion revenue loss occurred in the year 2004-05 to the national kitty owing to custom exemptions available under SRO438 of 2001, as against Rs3.013bn in the year 2003-04.
And a revenue loss of Rs1.976bn due to SRO439 of 2001 occurred during the year 2004-05, over the last year; Rs989 million due to SRO357 of 2002; Rs222 million due to SRO558 of 2004; Rs1.019bn on account of SRO678 of 2004; and Rs591 million due to SRO46 of 2005.
The exemption available under central excise duty also increased by 950pc to Rs0.021bn during the year 2004-05, as against Rs0.002bn last year. The total cost of central excise exemptions stood at Rs19.5 million in the year 2003-04. This exemption was granted to the Aga Khan Development Network for the Aga Khan Hospital and Medical College, Karachi, on the purchase of cement for the construction of oncology and laboratory building.
According to the report, the total number of tax exemptions available to taxpayers under the income tax ordinance stood at 100. And the total cost of these exemptions stood at Rs4.60bn during the year under review against Rs6.15bn last year, indicating a decrease of 25.2pc.
Under the income tax, the exemptions were mostly related to National Saving Schemes, pensions, provident funds and superannuation funds. The accumulated loss occurred due to pensions stood at Rs0.70bn in 2004-05, allowances Rs1.10bn, income from funds Rs0.60bn, NSS interest income Rs0.5bn, other interest income Rs0.05bn, capital gains Rs0.95bn, sector and enterprise specific exemptions Rs0.7bn.
The sales tax exemptions declined by 15.1pc to Rs7.85bn in the year 2004-05 against Rs9.25bn over the corresponding year.
