Finance Minister Ishaq Dar presented the Federal Budget for the fiscal year 2023-24 (FY 2023-24) in the National Assembly. Before the announcement of the Federal Budget 2023-24, Prime Minister, Shehbaz Sharif, addressed the public and lambasted the previous PTI-led Government for destroying the economy.
Federal Minister Ishaq Dar also blamed the previous PTI-led Government’s poor policies for the current economic downfall of the country. He said that PTI-led Government intentionally made poor decisions to destroy the country’s economy by providing fuel and electricity subsidy.
Budget Outlay
The budget outlay for the fiscal year 2022-23 is Rs. 14.5 trillion, which is significantly higher compared to last year’s budget.
Meanwhile, the Federal Government has set Federal Board of Revenue (FBR) tax collection target at Rs. 9.2 trillion and a non-tax revenue target of Rs. 2.7 trillion.
Economic Growth
The Federal Government has set a Gross Domestic Product (GDP) growth target at an estimated 3.5 percent for the 2023-24 fiscal year (FY 2023-24). According to the Annual Development Plan, the Federal Government has fixed a target 3.5% for the agriculture sector.
Meanwhile, a growth of 3% is expected for important crops, 7.2% for cotton ginning, a growth target of 3.6% has been set for livestock, 3% for forestry and fishing, respectively.
Furthermore, the Annual Development Plan estimates a growth of 3.4% for the industrial sector in the new fiscal year 2023-24 (FY 2023-24). According to the details, the Federal Government expects a growth of 1.2 percent in mining and quarrying, 4.3% in manufacturing, 2.2% in electricity and gas distribution, and 1.5% in construction.
Moreover, a growth of 3.6 percent is expected from the Services sector, while wholesale and retail is expected to grow by 2.8%, transport, storage and communication by 3.5%, accommodation and food services by 4.1%, information and communication by 5%, financial and insurance activities by 3.7%.
Meanwhile, a growth of 3.6% is expected for the real estate industry, 3% for education, another 3% for human health and social work, 3.2% for public administration and social security, and 5% for other private services.
Inflation
Pakistan’s inflation is likely to remain above 28 percent against a target of 11.5 percent for the outgoing fiscal year, Ishaq Dar said on Thursday as he disclosed the Economic Survey 2022-23.
Mini-Sports Stadium
The Federal Government plans to construct 250 mini sports stadiums or complexes across the country. According to the details, the estimated cost of the project is Rs. 12 billion and it is aimed to create a create a better sports infrastructure for young and upcoming athletes.
Out of the 250 mini-sports stadiums, 60 of them will be built in Punjab, 50 in Khyber Pakhtunkhwa, 30 in Balochistan, and 70 in Islamabad, Azad Jammu and Kashmir (AJ&K) and Gilgit Baltistan.
Freelancers and IT Sector
The Federal Government has decided to reduce tax rates on investments in the Information Technology (IT) Sector and also offer tax relief to freelancers in the country in order to encourage IT exports.
According to the details, the Government aims to normalize duty-free equipment to encourage investment in this sector.
Finance Minister Ishaq Dar has proposed a 0.25 percent tax break for the next three years in order to increase IT exports in the country. Furthermore, he said that banks will be provided a lower tax rate of 20 percent to assist in lending on investments in the IT sector.
This is significantly lower than the current tax rate on banks, which stands at 39 percent, for such investments.
Duty-free import of IT-related equipment equivalent to 1% value of their export proceeds.
The Government will also introduce a scheme to provide training to 50,000 IT graduates in the next fiscal year.
Withholding Tax on International Debit/Credit Card Payments
The Government has increased the Withholding Tax (WHT) on international credit and debit card payments by several fold. According to the details, the WHT on such transactions have been increased from 1% to 5% in the fiscal year 2023-24.
Furthermore, the Government has proposed to increase the rate of fee on all off-shore digital services from 10 percent to 15 percent under Section 152 (1C).
The reason behind the decision is to discourage the outflow of foreign currency through banking channels.
Tax on Cash Withdrawals on Non-Filers
In the new budget 2023-24, the Federal Government has decided to impose a flat fee of 0.6 percent on non-filers on cash withdrawals increasing Rs. 50,000. The reason behind the move is to document cash withdrawal data on non-ATL individuals and increase their transaction expenditure.
Discount on Digital Payments at Islamabad Restaurants
In order to encourage digital payments, the Federal Government has decided to provide a tax relief from 15 percent to 5 percent for payments made using credit / debit cards, QR code and wallets at restaurants in Islamabad.
Increase in Pension and Salary
According to the Budget 2023-24, the Government has decided to increase pension by 17.5 percent. Furthermore, the salary of Government Employees of Grade 1 to 16 will get an increase of 35%, while salary of Government Employees of Grade 17 to 22 will get an increase of 30%.
This includes cafes, food parlors, eateries, prepared or ready-to-cook food service outlets, etc.
Tax Relief for Hybrid Cars
The Government has reduced Custom Duty (CD) on import of hybrid electric vehicles (HEVs) to just 1%. Furthermore, the CD on lithium-ion batteries has been reduced to 0%. These measures will lead to a positive impact towards the prices of hybrid vehicles in the country.
It is pertinent to mention that CD on import of CKD kits of HEVs have also been reduced. According to the details, the CD on HEV CKD import is 4%, while the CD on plug-in hybrid electric vehicle (PHEV) CKD is 3%.
Withdrawal of Fixed Duties and Taxes on Import of Old Vehicles Above 1300CC
The Government has also announced withdrawal of capping of the fixed duties and taxes on the import of old and used vehicles of Asian Makes above 1300cc.
Relief for Bus and Truck Manufacturers
The Government has announced a major relief for bus and truck manufacturers in the Financial Budget 2023-24. According to the details, manufacturers of Heavy Commercial Vehicles (HCVs) will get a relief of 5% in the Customs Duty (CD) on import of completely knocked down (CKD) buses and truckts.
The new CD will be 5% reduced from 10%.
WHT on Bonus Shares by Listed/Non-Listed Companies
The Government has proposed that every company issuing bonus shares to shareholders of the company shall be charged 10 percent WHT on the bonus shares in order to help collect tax revenue on dividends.
Tax Relief on Solar Panels and Inverters
In order to promote renewable energy, the Government has proposed 0% tax on parts of solar PV modules panels manufacturing, machinery, and equipment. Furthermore, the Government has also proposed a 0% tax on parts of solar inverters in the Finance Bill 2023-24.
These steps will make prices of these items much cheaper in Pakistan.
Tax Relief for Construction and Property Sector
The Government has also decided to provide a tax relief of 10 percent of Rs. 5 million on the business income of builders for the next three years. Meanwhile, a similar incentive has been provided to individuals, who will get tax relief of 10 percent or Rs. 1 million for next three years.
The tax relief shall be applicable from July 1, 2023.
Moreover, the banks providing loans to these sectors will also be charged taxes at concessional rates of 20 percent against the standard rate of 39 percent. This will be applicable to income of banks through these loans only.
Import of Essential Items
There will be no additional duties on the import of essential items, while there will be exemptions of customs duties on raw materials of diapers, sanitary napkins, etc.
Amnesty to Bring More Dollars to Pakistan
The Government has enhanced the monetary limit of foreign remittance remitted from outside Pakistan from Rs. 5 million to an equivalent of $100,000. The person bringing these dollars into the country will not be required to disclose the source of income.
Agro-based Industries
The Government has announced a tax holiday for five years for agro-based industries being SMEs set up on or after July 1, 2023, from tax year 2024 to tax year 2028.
Imposition of Taxes on Import of Tractors
The Government has imposed up to 15% Custom Duty (CD) on import of agriculture tractors in the new budget 2023-24. According tot he details, a 15% CD has been set for tractors with engine power between 26 kW and 75 kW, while other tractors will be charged CD at 10%.
This is to promote sales of local tractors.
Tax Relaxation on Purchase of Immovable Property
The Government has announced a 2% final WHT waiver on purchase of immovable property for non-resident individual POC/NICOP holder where immovable property is acquired through foreign remittances remitted from outside of Pakistan.
PM Youth Loan
The Government is setting a budget of Rs. 10 billion for loans to youth under the PM Youth Loan Programme.
Education
The Federal Government has proposed an allocation of Rs. 65 billion for the Higher Education Commission (HEC) under the current expenditures, while Rs. 70 billion have been allocated for under the development expenditures.
Meanwhile, the Government has decided to distribute 100,000 laptops to merit based deserving students with a budget of Rs. 10 billion.
Super Tax Slabs
The Government has revised the Super Tax slabs for the fiscal year 2023-24 (FY24).
Under the new slabs, for individual earning below Rs. 150 million, the tax rate will be 0%. Meanwhile, the tax rate for individuals earning 150 million to Rs. 200 million, Rs. 200 million to Rs. 250 million, Rs. 250 million to Rs. 300 million, and Rs. 300 million to Rs. 350 million remains unchanged at 1 percent, 2 percent, 3 percent and 4 percent, respectively.
However, the individuals with income of Rs. 350 million to 400 million will be charged 6% super tax compared to 4% during previous fiscal year. Furthermore, the individuals with income of Rs. 400 million to 500 million will be charged 8% super tax and those whose income exceeds Rs. 500 million will be charged 10% super tax.
Relaxation for Overseas Pakistan Sending Remittances
As mentioned above, there is abolishment of 2% final tax on the purchase of immovable property.
Furthermore, there is an introduction of a “diamond card” for people sending over $50,000 — through which they can get one non-prohibited bore license, gratis passport, preferential access to Pakistani embassies and consulates, fast-track immigration at Pakistani airports, special prizes through draws.
Benazir Income Support Programme (BISP)
The budget for BISP has been increased to Rs. 450 billion.
Utility Stores
Rs. 35 billion has been set to provide target subsidy for poor to get commodities like flour, sugar, etc through utility stores.
Abolishment of Regulatory Duty on Used Clothes
The Government has abolished RD on import of used clothes.
Telecom Services and Packages to Get Cheaper
Telecom services and sim packages will get cheaper as the Government has reduced the Federal Excise Duty (FED) from 19.5% to 16% during fiscal year 2023-24.
Increase in Minimum Wage
The Federal Government has decided to increase the minimum wage to Rs. 30,000 amid high inflation.
WhatsApp
Google News
Follow Us on Google News
