Despite falling short in tax collection, the federal government gave tax exemptions worth Rs. 5.84 trillion during the current fiscal year, according to the Economic Survey 2025. This comes at a time when the FBR is already struggling to meet revenue targets.
The biggest part of these exemptions more than Rs. 4.25 trillion came from sales tax relief. Out of this, around Rs. 87.95 billion was specifically waived on mobile phone sales. Income tax exemptions totaled over Rs. 800 billion, while relief from customs duties crossed Rs. 785 billion.
Several key sectors received major benefits. The export sector saved about Rs. 178 billion through waived customs duties. The automobile industry and CPEC-related sectors also received Rs. 133 billion in exemptions.
Moreover, tax relief worth Rs. 61 billion was granted to areas in the former Federally Administered Tribal Areas (FATA) and Provincially Administered Tribal Areas (PATA), which were merged with Khyber Pakhtunkhwa.
While these exemptions support specific industries and regions, they have raised concerns about the country’s fiscal management. With Pakistan under pressure to meet IMF conditions and boost domestic revenue, such large-scale tax relief may complicate efforts to stabilize the economy.
Experts say that while tax exemptions can support growth in key sectors, the government needs a better balance between giving relief and meeting revenue goals. As Pakistan works on its upcoming budget, how it manages these trade-offs will be critical for long-term economic stability.
