Pakistan reports Rs11.047tr tax exemptions as LPG relief policy nears

Pakistan granted tax exemptions and concessions valued at Rs11.047 trillion over five fiscal years, the National Assembly was informed during proceedings in Islamabad. The disclosure covered the period from 2020-21 through 2024-25 and brought renewed attention to the scale and beneficiaries of tax expenditures.

The latest official Tax Expenditure Report, presented with the Finance Bill 2026, estimated exemptions for fiscal year 2024-25 at Rs2.35281 trillion. That annual amount comprised approximately Rs1.27398 trillion in sales-tax concessions, Rs579.70 billion in income-tax relief and Rs499.14 billion in customs-duty exemptions.

Tax expenditure represents government revenue that is not collected because particular goods, sectors, transactions or taxpayers receive exemptions, reduced rates or other concessions. Such measures can pursue economic or social objectives, but their size makes transparent reporting and periodic assessment important for determining whether the intended public benefits are being achieved.

Lawmakers questioned how the concessions had benefited ordinary citizens and sought greater clarity about the sectors and institutions receiving them. The discussion came as salaried households and other taxpayers continued to face pressure from living costs, energy prices and demands for higher government revenue.

During the same session, Petroleum Minister Ali Pervaiz Malik said the government was preparing a comprehensive policy to address rising liquefied petroleum gas prices. He indicated that the proposed framework, expected to be finalised within one or two days, would seek to strengthen supplies, improve market competition and provide targeted assistance to vulnerable households.

The minister said the notified price for locally produced LPG was Rs280, while imported supplies were not covered by an equivalent pricing arrangement. Domestic prices were also linked to the Saudi Aramco contract benchmark, which had risen to $705 per tonne, increasing pressure on distributors and consumers.

Authorities are examining alternative supplies from Oman and Saudi Arabia while reviewing the additional costs associated with imported LPG. The government must also determine how locally produced and imported fuel can operate within a common market without creating enforcement problems or unequal pricing conditions.

The policy debate has become more urgent because Pakistan’s gas system has reportedly lost around 900 million cubic feet per day of supplies from Qatar amid the Middle East conflict. With winter approaching and alternative-fuel demand expected to rise, the effectiveness of the coming policy will depend on clearly defined eligibility rules, sustainable financing and reliable access to additional supplies.