ISLAMABAD: The government has granted a whopping relief of Rs656 billion in customs duties, income tax and sales taxes to both public and private sector companies over the past four years.

In a written response to a query, Finance Minister Dr Abdul Hafeez Shaikh told the National Assembly on Monday that the waivers were as per the relevant laws.

However, some independent experts said that in a country like Pakistan, where not many people regularly paid taxes, the government should review its tax exemption schemes that are frequently manipulated, even abused.

Dr Shaikh told the assembly that the total amount of customs duties waived off in the last four years stood at Rs361bn.

The government waived off customs duties amounting to Rs73bn in 2008-09, Rs81bn in 2009-10, Rs93bn in 2010-11 and Rs114bn in 2011-12.

Similarly, the income and sales taxes waived off during the period amounted to Rs295bn. Under these categories, the government granted relief of Rs58bn in 2008-09, Rs73bn in 2009-10, Rs71bn in 2010-11 and Rs93bn in 2011-12.

The minister said there were two types of waivers; firstly the exemptions which were laid down within the tax laws and were claimed by the taxpayers at the time of filing of tax returns. Secondly, the government had the option to allow exemptions and waive-offs of taxes anytime during the year keeping in view the economic realities.

Under the Income Tax Ordinance of 2001, notifications are issued under section 53(2) of the Income Tax Ordinance of 2001. Likewise, section 13 of the Sales Tax Act empowers the federal government to allow waivers to various taxpayers.

The procedures to waive-off taxes by the FBR (Inland Revenue) with regard to income tax, sales tax and federal excise duty are enshrined within the respective taxing statutes; the Income Tax Ordinance of 2001, Sales Tax Act of 1990 and the Federal Excise Duty Act of 2005.

The government has taken measures to improve customs and tax departments, including creation of the directorate-general of the Transit Trade, through the Finance Act of 2012, creation of the directorate-general of reforms and automation through the Finance Act of 2012, creation of the directorate-general of Risk Management through the Finance Act of 2012, and creation of the directorate-general of Intellectual Property Rights Enforcement through the Finance Act of 2012.

Dr Shaikh said the Federal Board of Revenue had launched a comprehensive programme of tax reforms under the Tax Administration Reform Project (TARP) which ended on June 30.

Measures like merger of income tax, sales tax and federal excise duty to be handled by one service, the Inland Revenue Service, have been taken which on the one hand have facilitated taxpayers and on the other have bolstered revenue collection.