Tax exemptions topped Rs11,000bn over five years, National Assembly told

The National Assembly was told that the federal government granted tax exemptions and concessions worth more than Rs11,000 billion across the five fiscal years from 2020-21 to 2024-25, according to figures the Ministry of Finance placed before the house.

As reported by ARY News, the ministry's reply put the value of exemptions at Rs1,482bn in 2020-21, rising to Rs2,239bn in 2021-22 and Rs2,540bn in 2022-23. It gave Rs2,352bn for 2023-24 and the same figure, Rs2,352bn, for 2024-25. The five yearly amounts add up to roughly Rs10,965bn, the basis for the "more than Rs11,000bn" total cited in the house.

Jamiat Ulema-e-Islam MNA Alia Kamran asked what benefit the public had drawn from the exemptions and whether ordinary citizens had gained anything from the concessions. She also pressed the government to clarify whether 2027 would be the last year in which Pakistan borrowed from the International Monetary Fund, referring to the prime minister's announcement that it would be.

The parliamentary secretary responded that he could not give a definitive assurance, but said he hoped 2027 would be the final year of borrowing from the lender.

Separately, ARY News reported, citing sources, that the government is considering a mini-budget to enact tax measures and levies under a new automotive policy. Electric vehicles are expected to receive sales tax relief worth about Rs85bn under the proposal.

The IMF has reportedly asked that sales tax on EVs be raised from 1 percent to 18 percent. Official documents instead suggest keeping the 1 percent rate on EVs valued at up to $75,000, which accounts for the Rs85bn relief. Sources said the resulting shortfall would be recovered through an alternative plan, with a finance bill imposing a Federal Excise Duty and an Automotive Development Levy.

Under the draft policy, a 2 percent levy would apply to vehicles with engine capacities between 1001cc and 2000cc, and 10 percent to those of 2001cc and above. Official documents indicate the development levy would cover all locally assembled and imported petrol and internal combustion engine vehicles, alongside a possible 10 percent excise duty on EVs priced above Rs20 million and a new carbon levy on petrol and ICE vehicles.

The government expects to raise Rs25bn from the carbon levy on petrol, diesel and ICE vehicles, Rs37bn from general levies on the same vehicles, and about Rs45bn from levies on commercial buses and trucks.