June 05, 2006	Monday	Jumadi-ul-Awwal 8, 1427

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ISLAMABAD, June 4: The losses to national kitty on account of major tax exemptions declined by 11.9 per cent to Rs21.91 billion in 2005-06 as against Rs24.87bn the previous year.

The Economic Survey Report 2005-06 released here on Sunday indicated that this year the cost of exemption in taxes had declined mainly due to withdrawal of exemption/concession by providing level-playing field both to local and foreign investors/manufacturers.

The report said that the exemptions available under customs duty decreased by 33.8pc to Rs8.21 billion in 2005-06 as against Rs12.40 billion the previous year.

Various SROs also inflicted losses to the national kitty in 2005-06 that included SRO439 of 2001 (Rs5m); SRO456 of 2004 (Rs2.830bn); SRO457 of 2004 (Rs3.778bn); SRO678 of 2004 (Rs1.380bn). Concessions of customs duty on goods imported from Saarc and ECO countries caused Rs217m loss to the revenue.

The exemptions available under federal excise duty (FED) also increased by 100pc to Rs0.40bn during 2005-06 as against Rs0.02bn last year. The major exemption in FED was data communication including the internet service. There were few other conditional excise exemptions mostly related to excisable products such as tobacco, POL products supplied to armed forces and UN agencies.

According to the report, a total of 100 exemptions were available to the taxpayers under the income tax ordinance which cost Rs4.60bn during the year under review against Rs4.60bn the last year, showing an increase of 1.1pc.

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 2005-06, allowances Rs1.15bn, income from funds Rs0.60bn, NSS interest income Rs0.45bn, other interest income Rs0.05bn, capital gains Rs0.95bn.

On the other hand, the sales tax exemptions increased by 10.7pc to Rs8.65bn in 2005-06 against Rs7.85bn the previous year.

Key exemptions of sales tax were agriculture produce, pharmaceutical products, pulses and information related products, tractors and other agricultural machinery and fertilisers.