According to the newly issued tax expenditure report-2023 by the Federal Board of Revenue (FBR), the overall tax expenditure for income tax exemptions has decreased in 2021-22 compared to 2020-21.
Increase in Sales Tax Exemptions and Stable Custom Duty Expenditure
The report highlights a significant increase in the cost of sales tax exemptions during 2021-22, while the custom duty expenditure remains stable when compared to 2020-21.
Shift in Tax Expenditure Share and Classification of Income Tax Expenditures
The tax expenditure report-2023 reveals interesting findings regarding the percentage share of different taxes in tax expenditure for 2021-22 compared to 2020-21. It shows a decline in the share of income tax expense, a significant increase in sales tax expenditure, and stable custom duty expenditure. The report further classifies income tax expenditures into various types of measures such as allowances, credits, exemptions, reduced rates, and exclusions. Overall, income tax expenditure accounted for 18.93 percent of the total expenditure in 2021-22.
