The salient features of the Tax Forgone Statement issued by the Government are as under:
¢ The estimates and projections are intended to indicate the potential revenue gain that would be realized by removing exemptions under direct and indirect taxes and similar measures.
¢ The amount of duty/taxes which could have been collected but for the exemptions issued in this regard.
The Revenue Foregone Statement is an estimate of tax expenditures arising out of measures such as special tax rates, exemptions, deductions, rebates, deferrals and credits which are an integral part of the tax policy of the Government. Such exemptions are issued in public interest for fulfillment of the various policy objectives, such as, protection of small scale sector, industrial development of backward areas, encouragement of value addition, regulation of prices of essential commodities, implementation of treaty obligations and promotion of exports etc. These measures are collectively called as ˜tax preferences™. They have an impact on Government revenues and also reflect a significant policy of the Government. Such tax expenditures per se are spending programs embedded in the tax statute which are manifestation of the tax policy of the Government.
Exemptions are reviewed from time to time to assess their efficacy and remedial action is taken where necessary.