Customs exemptions cost Rs 92,561 crore

The amount forgone on corporate tax is Rs 57,852 crore.

The revenue forgone during 2004-05 was a whopping Rs 1,58,661 crore, of which the duty forgone on account of customs exemptions alone was Rs 92,561 crore. Duty forgone on account of excise exemptions was Rs 30,449 crore.

This was stated in a statement on revenue forgone, which was included for the first time in the Budget.

"An attempt has been made, in this first year of publication of this document, to take a broad approach and include estimates of the revenue loss associated only with major tax preferences. As computerisation of the management systems of the income-tax department and customs and central excise department progress, it will significantly improve the government's ability to refine these estimates," the Budget document said.

The revenue forgone would have come up to Rs 1,94,091 crore but for export credit-related drawbacks which came up to Rs 35,430 crore.

The amount forgone on corporate tax was Rs 57,852 crore. The co-operative sector accounted for Rs 1,534 crore of revenue forgone.

Under corporate tax, accelerated depreciation (under section 32) topped the list for incentives and deductions at Rs 27,077 crore.

Incentives for profits derived from housing projects, production of mineral oil, scientific research, storage and transportation of grain and industries set up in backward areas accounted for Rs 11,523 crore, while software units derived tax incentives were to the tune of Rs 7080 crore.

Exemption for small-scale industries was the highest for major tax expenditure under excise duty. The amount was Rs 11,316 crore. The fertiliser industry stood second under this category of tax exemptions at Rs 4,000 crore.

Area-based exemptions (in North-East states, J&K, Uttaranchal, Himachal Pradesh and Kutch district of Gujarat) accounted for Rs 1,502 crore. An excise exemption of 50 per cent for North-East oil refineries amounted to Rs 1,200 crore.

Under the export-linked drawbacks, the revenue forgone for the Duty Entitlement Pass Book scheme was Rs 9,671 crore and exemption under Quantity Based Advance Licence accounted for Rs 8,851 crore. Exemptions for 100 per cent export-oriented units was Rs 6,826 crore.