The Federal Board of Revenue (FBR) has published its latest report detailing the scale of tax exemptions granted during the last fiscal year.
The report shows that exemptions and concessions amounted to Rs2,434.73 billion, equal to 2.32% of the national GDP. This figure represents 26.18% of the FBR’s total tax collection, which stood at Rs9,299.08 billion. Although the value of exemptions has dropped sharply from the previous year—when they made up 54.15% of total revenue—the foregone sum remains a substantial portion of federal resources.
Breakdown of Exemptions
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Income Tax: Rs545.23 billion, equal to 5.86% of total collection, 22.39% of exemptions, and 0.52% of GDP.
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Sales Tax: Rs1,237.11 billion, the largest share, representing 13.30% of total collection, 50.81% of exemptions, and 1.18% of GDP.
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Customs Duty: Rs652.39 billion, making up 7.02% of total collection, 26.80% of exemptions, and 0.62% of GDP.
Key Insights
The report highlights that federal tax exemptions, measured against GDP, have nearly halved in one year—declining from 4.6% in FY 2022–23 to 2.32% in FY 2023–24. This reduction reflects the government’s attempt to rationalize concessions and move toward a more balanced revenue framework.
However, the FBR cautioned that the estimates should not be viewed as guaranteed revenue potential. Simply abolishing exemptions would not translate into an equivalent increase in collections, as actual outcomes depend on taxpayer behavior, economic performance, and market dynamics. The report also noted that indirect impacts on provincial revenues are not captured in these figures.
By releasing these findings, the FBR seeks to enhance transparency in fiscal policy and encourage debate on the fairness and efficiency of Pakistan’s tax system. The analysis is expected to guide policymakers in shaping future reforms, striking a balance between revenue generation and economic incentives.
