# Tax exemptions cost Pakistan Rs 11 trillion in five years, Rs 2.35 trillion in 2024-25

Source: Searchable (https://searchable.pk/news/economy/tax-exemptions-cost-pakistan-rs-11-trillion-in-five-years-rs-235-trillion-in)
Type: News article
Author: Searchable Editorial
Published: 27 Oct 2026
Updated: 27 Oct 2026
Retrieved: 27 Oct 2026

> The finance ministry's figures to the National Assembly show exemptions above Rs 2 trillion a year for four years running. Sales tax concessions are more than half the bill.

**Pakistan gave up more than Rs 11 trillion in tax exemptions over five fiscal years, from 2020-21 to 2024-25**, according to figures the Ministry of Finance put before the National Assembly in a written reply to a question from lawmaker Shaista Parvez, [ProPakistani reported](https://propakistani.pk/2026/10/27/govts-staggering-tax-exemption-bill-revealed/) on Tuesday. The cost has stayed above **Rs 2 trillion every year since 2021-22**.

## Tax exemptions in Pakistan, year by year

| Fiscal year | Cost of exemptions |
|---|---|
| 2020-21 | Rs 1.48 trillion |
| 2021-22 | Rs 2.24 trillion |
| 2022-23 | Rs 2.54 trillion |
| 2023-24 | Rs 2.43 trillion |
| 2024-25 | Rs 2.35 trillion |
| **Five years** | **about Rs 11.04 trillion** |

The peak was 2022-23. The last two years show a small fall, but the 2024-25 figure is still about 59% higher than in 2020-21.

Parliamentary Secretary Barrister Saad Wasim told the house the exemptions had been granted to improve the tax system.

## Where the Rs 2.35 trillion went

The official breakdown for 2024-25 is in the [Tax Expenditure 2026 annex](https://www.finance.gov.pk/survey/chapter_26/Tax_Expenditure_2026.pdf) of the Pakistan Economic Survey, published by the Finance Division. It puts the total at **Rs 2,352.81 billion**:

| Tax | Cost in 2024-25 |
|---|---|
| Sales tax | Rs 1,273.98 billion |
| Income tax | Rs 579.70 billion |
| Customs duty | Rs 499.14 billion |

**Sales tax** is more than half of the total. The biggest single item is reduced rates under the Eighth Schedule, Rs 635.8 billion, followed by exempt local supplies under the Sixth Schedule (Rs 305.6 billion) and exempt imports under the same schedule (Rs 261.3 billion).

**Income tax** concessions are dominated by exemptions from total income, Rs 438 billion, with tax credits at Rs 75.9 billion and reduced rates at Rs 50.7 billion.

**Customs** concessions include Rs 275.8 billion in general concessions for the automobile sector, oil and gas exploration and CPEC projects, and Rs 205.7 billion under the Fifth Schedule.

## What it means for you

A tax expenditure is revenue the government chooses not to collect. What is given up has to be made up through other taxes or borrowing, so the cost of exemptions falls on everyone who pays the full rate. The 2024-25 bill of Rs 2.35 trillion works out to roughly Rs 6.4 billion a day.

See what you pay yourself with our [income tax calculator](/tools/tax/income-tax-calculator) for salaried people, or check the sales tax inside a price with the [sales tax calculator](/tools/tax/sales-tax-calculator).

## Frequently asked questions

**How much do tax exemptions cost Pakistan?**

Rs 2.35 trillion in 2024-25 (Rs 2,352.81 billion in the Finance Division's Tax Expenditure 2026 report) and more than Rs 11 trillion over the five years from 2020-21.

**Which tax has the biggest exemptions?**

Sales tax: Rs 1,273.98 billion in 2024-25, more than half the total, led by reduced rates under the Eighth Schedule (Rs 635.8 billion).

## Sources

- Govt's Staggering Tax Exemption Bill Revealed (27 Oct 2026) (ProPakistani): https://propakistani.pk/2026/10/27/govts-staggering-tax-exemption-bill-revealed/
- Tax Expenditure 2026, Annexure II, Pakistan Economic Survey 2025-26 (Finance Division, Government of Pakistan): https://www.finance.gov.pk/survey/chapter_26/Tax_Expenditure_2026.pdf

How to cite: "Tax exemptions cost Pakistan Rs 11 trillion in five years, Rs 2.35 trillion in 2024-25", Searchable, 27 Oct 2026, https://searchable.pk/news/economy/tax-exemptions-cost-pakistan-rs-11-trillion-in-five-years-rs-235-trillion-in