Tax exemptions on official perks cost Rs30bn in 2019, says FBR.

Byline: Mubarak Zeb Khan

ISLAMABAD -- An official report of the Federal Board of Revenue (FBR) has shown income tax exemptions and concessions worth Rs30 billion given to the top government officials, military officers and judges of superior courts on perks and privileges in the tax year 2019.

The estimates come from the first-ever comprehensive report on 'Tax Expenditure 2020' produced by the FBR, which has also developed a special appendix on tax expenditure on pension and commutation of pension of government servants. Tax expenditure is a technical term that refers to the amount of revenue the state foregoes when it grants a tax exemption or a concession.

As per FBR details, the cost of exemptions on house rent allowance to judges of the Supreme Court or High Courts is estimated at Rs32 million. The total number of in-service judges is 130 and the total house rent allowance paid to judges in the tax year 2019 was Rs127.171m.

The total cost of exemption on perquisites, benefits and allowances received by judges of Supreme Court of Pakistan and High Court is estimated at Rs283m. The tax expenditure is calculated at the rate of 25pc.

The FBR report shows value of superior judicial allowance stood at Rs526.507m for in-service judges while the value of perquisites for in-service and retired judges is Rs605.280m. The former allowance is exclusively for 130 in-service judges while the second one is for both in-service and 390 retired judges. The exemption cost is estimated at Rs2m on free of rent residence for President of Pakistan, Governors and the Chiefs of Staff of Pakistan Armed Forces. The cost of concession in rates on allowance to pilots of any Pakistani airlines is estimated at Rs430m.

Reports tax expenditure on pension and commutation of pension of govt officials, military officers and judges

Similarly, the cost of lower rates on flying and submarine allowance is estimated at Rs133m. The exemption cost is estimated at Rs84m on income received by dependents and families of Shuhada. The cost of different allowances paid to armed forces personnel is estimated at Rs1.106bn.

The report did not mention the cost of free conveyance and sumptuary (entertainment) allowances given to Chiefs of Staff of Pakistan Armed Forces and corps commanders. The cost of foreign allowances to employees (diplomats) is estimated at Rs1.167bn.

As the pension and commutation of pension are exempted from income tax, the report used pension data maintained by four...