Govt to end GST exemption on 7,000 Items

GST exemptions include removal of exemptions and concessions on income tax and customs duty

Exemptions and concessions on income tax and customs duty are also being ended. Photo: Express

ISLAMABAD:

The federal government has decided to end large-scale tax exemptions in the upcoming federal budget for the fiscal year 2024-25.

This includes ending GST exemptions on approximately 7,000 items, as well as eliminating exemptions and concessions on income tax and customs duty. The volume of tax exemptions will be reduced.

The National Economic Survey for 2024-25, released on Tuesday, revealed significant insights regarding tax exemptions.

The survey indicated that tax exemptions amounting to Rs 3,979 billion were granted in the current fiscal year. These exemptions were provided in the areas of income tax, sales tax, and customs duty.

However, it is key to note that annual cost of tax losses due to various exemptions has surged to a record Rs3.9 trillion in the current fiscal year, a 73% increase from last year, becoming a contentious issue in ongoing negotiations between Pakistan and the International Monetary Fund (IMF).

Read: IMF proposes reviving 18% GST on petrol

The Economic Survey of Pakistan 2024, released by Finance Minister Muhammad Aurangzeb on May 11, revealed that despite multiple rounds of withdrawal of tax concessions and exemptions, the amount continues to rise annually.

These tax exemptions, approved over the years, are protected under existing tax laws.

Losses from reductions in tax liabilities amounted to Rs4.43 billion, lower than the previous year. Exemptions from “specific provisions” cost another Rs62 billion, also lower than last year.

Income tax exemptions availed by the government increased by 111% to Rs57 billion. These exemptions also benefited judges of superior courts, the President of Pakistan, military generals, federal bureaucrats, pensioners, and army institutions.

Customs duty exemptions cost Rs543 billion, up from Rs522 billion the previous year, a 4% increase.

RELATED

Load Next Story