Finance Minister Miftah Ismail presented the coalition government’s first budget to the National Assembly on Friday, with a Rs9.5 trillion investment for fiscal year 2021-22.
Government employees’ pay were increased by 15%, and the adhoc relief they had previously received was incorporated into their compensation. The pensions of civil officials were increased by 5%. Three million low-cost laptops will be distributed to young males.
The government has agreed to increase the income tax ceiling on the salaried class from Rs600,000 to 1.2 million per annum, which will benefit the middle class. Despite various obstacles in the country, Ismail remarked, Rs65 billion has been set aside for the Higher Education Commission (HEC).
The defence budget was granted Rs1,523 billion, while the development budget was allocated Rs808 billion. The payment of interest on loans was allocated Rs3,950 billion.
The government will compensate households earning less than Rs40,000 due to inflation, in addition to significantly increasing financing for the Benazir Income Support Program (BISP). The BISP scholarship is now available to ten million students.
Similarly, the government has agreed to provide tax cuts to the information technology, agricultural, clean energy, and education industries. To promote renewable energy, it has been suggested in this budget to waive sales tax on the import and distribution of solar panels. Agriculture machinery, such as tractors, as well as seeds, will be exempt from taxation.
Agriculture machinery would be exempt from customs duties, as well as greenhouse farming, drip irrigation, and water supply. Higher taxes on non-productive assets like real estate are also part of the government’s strategy to “transfer wealth from affluent to poor.”
“It is proposed to impose a tax on the rich’s non-productive assets in order to achieve a balance that would have a direct impact on property prices, making them more affordable for the lower economic classes.” The second property worth 2.5 crore will be subject to a 5% tax,” it stated.
The government agreed to exempt industrial feeders from power interruptions in order to stimulate industrial expansion. It also increased the minimum tax level for small enterprises from Rs4 lakh to Rs6 lakh.
Starting at Rs3,000 and less than Rs10,000, the fixed income and sales tax regimes will be implemented, after which the FBR would not ask for any additional taxes.
The taxable profit ceiling on savings certificates, pensioner payments, and martyrs’ family welfare account investments has been lowered from 10% to 5%.
The government will also raise the levy on cars with engines larger than 1600cc. It has set aside Rs10 billion to help alleviate climate change’s effects.
At least Rs 24 billion has been been allocated for immunization, disease management, and health-system capacity improvement. In addition, pharmaceutical ingredients and fundamental raw materials used in the production of a variety of medicines are exempt from customs duty.
According to the minister, the Federal Board of Revenue’s (FBR) objective for the next fiscal year is 9%, or Rs7,400 billion, with the provinces being required to collect Rs4,100 billion.
According to Ismail, the federal government’s net revenue for the next fiscal year is predicted to be Rs4,904 billion, non-tax revenue would be Rs2,000 billion, and spending will be roughly Rs9,502 billion.
Pakistan would also spend Rs3,950 on debt servicing, according to the finance minister, who also announced that the tax on non-filers will be raised from 100 percent to 200 percent.
The current fiscal year’s total interest payments are expected to be Rs3,144 billion (including Rs2,770 domestic and Rs373 foreign), while the following year’s would be Rs3,950 billion.
According to Ismail, the federal government’s overall expenditure for the current fiscal year is estimated to be Rs9,118 billion, with the Public Sector Development Programme (PSDP) costing Rs550 billion and debt servicing costing Rs3,144 billion.
He recommended raising the advance tax on purchase and sale for filers from 1% to 2%, while the tax rate for non-filers will remain at 5%.
According to the minister, if a person owns an immovable property of Rs25 million or more, 5% of its rate will be deemed supplementary income.
He stated that the government would levy a 1% tax on this money. He noted that if a person owns an immovable property for more than a year, they will be taxed a 15% capital gain tax, which will drop to 0% after six years.
Ismail expressed confidence that Pakistan’s new coalition government will help the country recover from its economic crisis: “We’ve done it before, we know how to do it, and we’ll do it.”
The minister went on to say that in the coming fiscal year, the country must improve the poor’s economic situation by providing them with services.
“When the poor’s income rises, they buy locally created consumer products. As a result, exports are reduced, and the development process begins. “By implementing the above-mentioned initiatives, we can achieve inclusive growth,” he stated.