Finance Minister Ishaq Dar presented Rs14.46 trillion ($50.45 billion) worth of budget in the National Assembly on Friday. The government will target a budget deficit of 6.54% (Rs7.57 trillion) of economic output in the fiscal year starting on July 1, he said, slightly below the current year’s revised estimate of 7%.
“The government has prepared a responsible budget, not an election budget,” he said on the floor of the house.
The ruling alliance has planned to meet its expenses through taxes, internal borrowings, and more than $2 billion from the IMF under the loan programme.
He started his speech by blaming the PTI, the Ukraine war, and the 2022 flash floods for the country’s financial woes. Prime Minister Shehbaz Sharif, Defence Minister Khawaja Asif, and other federal cabinet members were present in the august house.
The deficit target for the fiscal year ending this month had been revised higher, from a previous projection of 4.9%.
The budget needs to satisfy the IMF to secure the release of stuck bailout money for the crisis-struck country, which is due to hold a general election by November.
Around Rs1.8 trillion – out of the total Rs14.46 trillion – would go to defence. It would target debt servicing of Rs7.3 trillion.
Salient features of budget
Targets inflation at 21%
Total revenue budgeted for FY23 stands at Rs12,163 billion
Net revenue comes out at Rs6,887 billion after subtracting provincial transfer of Rs5,276 billion
Expense: Rs1,460 billion
PSDP: Rs1,150 billion
Subsidy on electricity, gas, and other sectors: Rs1,074 billion
Exports: $30 billion
International trade: Targets exports of $30 billion
Estimates debt servicing funds of Rs7.3 trillion
Services provided by restaurants including cafes, food (including ice cream), parlours, coffee houses, coffee shops, deras, food huts, eateries, resorts and similar cooked, prepared or ready-to-eat food service outlets etc are proposed to be taxed at 5% if payment is made through debit or credit cards, mobile wallets or QR scanning
Monthly salary increased from Rs25,000 to Rs32,000
0.6% tax on bank transactions over Rs50,000 for non-filer; 10% tax on more than Rs500 million of the annual income of shareholders; and zero tax on less than Rs150 million of the annual income of shareholders
Defence budget: Rs1,809 billion. Pakistan Army will get Rs824 billion, an increase of Rs81 from the previous year. Rs128 billion for Bahria. Rs18 billion
Withdrawal of capping of the fixed duties and taxes on the import of old and used vehicles of Asian Makes above 1300CC
Agriculture
Increase agri loans from Rs1,800 billion to Rs2,250 billion
Rs30 billion for 50,000 shifting tube wells to solar panel
End taxes on import of saplings, seeds
Ending duty and taxes on rice seeder, planter, and dryer in order to increase production
Scheme for concessional loans, Rs5 billion allocated for it
All agro-based units that are industrial in rural areas that have an annual turnover of 800 million, will be exempted from taxes for 5 years
Business and agricultural loan scheme: Rs10 billion allocated for concessional loans
$6 billion for subsidy on imported urea
Loans to farmers at a small interest rate, Rs10 billion allocated for it
IT and freelancers
Income tax for freelancers will be 0.25% till 2026
If a freelancer brings $24,000 annually they will be exempt from tax returns
Companies will able to import hardware, software upto $50,000 without tax
Sales tax on IT services which stands at 15% is brought down to 5%
IT sector given small and medium enterprise (SME) status and concessional tax will be applicable to them
Banks will have 20% concessional taxes (exemption) on providing loans to IT
The government will form an Rs5 billion venture capital fund for the IT sector to encourage entrepreneurs
Rolling out a scheme to give professional training to 50,000 IT graduates
SMEs to be supported through special allocation and SBP loan scheme
Export Council of Pakistan will be formed under the PM to see matters of exports only
Banks will have a 20% concession on taxes that will provide loans to agri, IT, and SMEs. It will be available for two years. SMEs turnover threshold has been increased from Rs250 million to Rs800 million
Rs10 billion allocated for small businesses under the PM scheme
Government will bear tax payments up to 20% if SMEs fail to pay loans
Tax on young entrepreneurs decreased by 50%
Separate credit agency for SMEs
Energy projects: Rs86.4 billion
Infrastructure: Rs491.3 billion
Metal
Metal and mineral sales through online platforms made tax free
Tax on listed companies to come down from 1.5% to 1%
Custom duty on pet scrap material down to 11% from 20%
Capacitators, mining machinery, adhesive tapes, rice mill machinery, machine tools are cleared of customs duty
Filament yarn for the textile industry to be made tax free
Remittances are equal to 90 % of exports, that is how important overseas Pakistanis are
They have a tax worth 2% on something, that is being removed
Concessions for overseas Pakistanis
Abolishes 2% tax on buying immovable property in Pakistan
Diamond card category added in remittances card. It will be issued to those who will send more than $50,000 worth of remittance to Pakistan. They will have non-prohibited board licenses, greatest passport of Pakistan, preferential access to Pakistan’s embassies and consulates, fast track immigration facilities at airports. A scheme will be launched by SBP to award prizes via a lucky draw to diamond cardholders.
Construction
Construction company, for construction of new homes and buildings, to get tax relief of 10% or Rs5 million in their earning
It is proposed that 10% tax credit or Rs1 million to those who will construct homes for themselves. It is proposed that it should be applicable to projects after July 31, 2023.
More than 40 industries are associated with this sector
Tax benefits for Real Estate Industry Trust (REIT) will be extended for another year. So it will be applicable till June 30, 2024
Education
Rs65 billion for HEC
Rs70 for development expenditure
The total of this is Rs135 billion for higher education
Setting up Pakistan Endowment Fund, for which Rs5 billion is kept. Under this scholarship and stipend will be given to high school students
Rs10 billion for the laptop scheme. 100,000 laptops will be given.
Sports
Rs5 billion for the development of sports at schools, colleges, and professional sports
Women empowerment
Rs5 billion for women’s empowerment
Skill development, easy loans for business, training for business
Relief in tax for businesswomen
Youth
It is proposed that for the next three years, tax should be reduced by 50% for income earned by youth from businesses under AOP.
It will be 2 million for individual or group level and 5 million for company level
The age of the owner should be up to 30 years and this programme should start after July 31, 2023.
Rs10 billion for the PM youth programme
Rs5 billion for trainings under the PM youth programme
BISP
92,000 students to get undergrad salary under the BISP. For this, $6 billion has been allocated.
1.5 million children will be provided services under the BISP nutrition programme. Rs32 billion allocated for it
Second-hand clothes have a 10% duty which is not being removed
Rs450 billion allocated for low-income families
Rs8,750 quarterly will be available for 9.3 million families under the BISP Kafalat programme. The government has allocated Rs346 for it.
Stipend prorgamme will be expanded from 6 million to 8.3 million children. It will have 52% girls. Over Rs55 billion has been allocated for it.
USC
Rs35 billion allocated for basic items for deserving families
Targeted subsidies on flour, rice, sugar, pulses, and ghee
Pakistan Baitul Mal
Rs4 billion for treatment and assistance of deserving families
Solar panels
Solar panels and their raw materials are exempted from the customs duty
Laptop computers, notebooks whether or not incorporating multimedia kit
Personal computers
Other
Micro computer
Key boards
Mouse and other pointing devices
Scanner
Other
CD ROM drive
Multimedia kits for
Software Export Board
Hard disk drives
Servers
Routers
Imports exempted from duty
Specific papers and art cards and board for the printing of Holy Quran
Solar panels and import of related machinery
Diapers, Sanitary Napkins and Adhesive Tape
Mining machinery
Rice mill machinery
Machine tools
Imported seeds
Shrimp/prawns for breeding
Roasted peanuts
Any machinery imported into erstwhile Fata
Products exempted from Sales Tax
Contraceptives
Agricultural machinery including combine harvesters, dryers for agricultural products, no-till-direct seeders, planters, trans-planters
Sales tax in FATA’s newly merged districts
import of IT equipment (for exporters)
Reduced duty on imported items
Customs duty on Heavy Commercial Vehicles from 10% to 5%
Scrap for manufacturers of polyester filament yarn
Second-hand clothing, fish, tiles, sports goods
IT based system development consultants reduced to 15% from 16%
Dar reiterated that the government hoped to get an agreement with the IMF soon, echoing comments made earlier in the day by Prime Minister Shehbaz Sharif as he addressed his cabinet.
Shehbaz’s government is hoping to persuade the IMF to unlock at least some of the $2.5 billion left in a $6.5 billion programme that Pakistan entered in 2019 and which expires at the end of this month as the country deals with a series of economic and political crises.
The budget would target total tax revenue of Rs9.2 trillion, said Dar, who added there would be no new tax on the industrial sector. The government has targeted total non-tax revenue of Rs3 trillion for 2023/24.
Inflation for the next fiscal year is expected to come in at 21%, the finance czar said.
The finance czar alleged that the PTI government laid “minefields” – a term also used by his predecessor Miftah Ismail for the petrol subsidies announced by ex-PM Khan before leaving office – by giving subsidies on electricity and petrol in violation of the IMF agreement.
The people should realise who damaged the country and saved the country, Dar said as he put all the blame on the PTI.
“Rs5 trillion debt was taken before PTI took over and Rs49 trillion was by the time PTI left,” he said, “The debt increased by 98% in PTI tenure.” He added that God saved Pakistan from going default.
“We did not care for political loss in trying to save Pakistan from default. People must see who saved Pakistan from default and who pushed Pakistan towards it,” Dar said.
He demanded that people who attacked military installations on May 9 – the day when violent protests turned up in the wake of Imran Khan’s arrest – should be held accountable for their actions.
