Finance Minister Ishaq Dar made an announcement on an increase in salary and pension during the presentation of the budget for the fiscal year 2023–2024 in an effort to support government workers in the face of a significant rise in inflation.
Minister Dar stressed that the rising cost of living has negatively impacted government workers’ purchasing power while acknowledging the issues they were facing as a result of inflationary pressures. The administration has taken steps to give assistance to government workers in response to these worries and within the restrictions of scarce resources.
Key Features and Highlights of Budget 2023-24
- The expected average level of inflation is 21%.
- Tax to GDP Ratio Will Be 8.7%
- By the conclusion of fiscal year 2023–2024, the current account deficit will be $6 billion.
- 5% is the fixed economic growth objective for the fiscal year 2023–2024.
- Government spending on defense is budgeted at Rs1.8 trillion.
- Subsidies of Rs1.1 trillion are planned
- Amount allotted for pension: Rs761 billion
- An announcement of a targeted subsidy for rice, legumes, ghee, and wheat flour
- 950 billion rupees will be spent by the government on the Public Sector Development Program.
- With $22.7 billion set aside for the health sector
- Credit ceiling for agriculture increased from Rs. 1,800 billion to Rs. 2,250 billion
- 50,000 agricultural tube wells would be solarized for Rs 30 billion.
- PM’s Youth Business and Agriculture Loans scheme would receive Rs10 billion.
- Imports of raw materials for batteries, solar panels, and inverters are exempt from customs taxes.
- Rice planters, combine harvesters, dryers, and seeds will no longer be subject to import taxes or fees.
- A Rs. 6 billion subsidy for imported urea was offered.
- Government employees in grades 1 through 16 will receive an ad hoc raise of 35%.
- Government employees in grades 17 through 22 will receive an ad hoc raise of 30%.
- IT and IT-enabled services can import software and hardware tax-free up to $50,000 and 1% of their exports.
- Freelancers with exports of $2,000 a month fail to file a sales tax return.
- A rise in funding for the Benazir Income Support Program from Rs400 billion to Rs450 billion
- Pensions are being revised upward, and the minimum pension has been raised to Rs 12,000
- The provision of 100,000 laptops for schoolchildren will cost Rs10 billion.
Income tax
The Finance Bill proposes maintaining the super tax and making it equitable for all individuals earning over Rs. 150 million. Three new income tiers will exist: Rs350 million to Rs400 million, Rs400 million to Rs500 million, and beyond Rs500 million. Tax rates will be 6 percent, 8 percent, and 10 percent, respectively.
Citizens who are not on the Active Taxpayers’ List (ATL) will once more be subject to a 0.6 percent withholding tax when making cash withdrawals over Rs50,000. The withholding tax rates on supplies of products (apart from rice, cotton seed, and edible oils), services (except from advertising in electronic and print media), and contracts (aside from athletes) would all rise by one percent.
For business importers of certain commodities, the withholding tax rate will rise by 50 basis points to 6 percent. On bonus shares issued by a corporation, a final withholding tax of 10% will be applied, or 20% for tax non-filers.
For payments made to non-residents using debit, credit, or prepaid cards, the withholding tax rate will rise from 1 percent to 5 percent for filers and from 2 percent to 10 percent for non-filers. When a work permit or visa is issued for a foreign domestic assistant, an adjustable advance tax of Rs200,000 will be assessed.
Due to exceptional profits from outside sources, a person or group may be subject to an additional tax of up to 50% on their income.
Sales Tax, Excise Duty
Sales tax on edible goods sold in large quantities under brand names or trademarks has been eliminated by the government. On supply made by point-of-sale (POS) retailers selling leather and textile goods, sales tax has gone hiked from 12 to 15 percent.
Energy-inefficient fans are subject to a federal excise charge (FED) of Rs 2,000 per fan and 20 percent ad valorem on incandescent lights. Royalties and fees for technical services have been added to the FED on services’ increased scope.
Contraceptives and their accessories, plant saplings, combine harvesters, dryers for agricultural products, no-till-direct seeders, planters, trans-planters, other planters, bovine sperm, and the import of IT equipment by IT and ITeS exporters registered with the Pakistan Software Export Board are all exempt from paying sales tax for one more year, ending in June 2024.
Wrap Up
Prior to the Cabinet meeting to adopt the budget, Prime Minister Shehbaz Sharif presided. He said that his government had accepted all IMF requirements and hoped to obtain the remaining cash.
But given that South Asia is presently experiencing its worst economic and political crisis, he asserted that the nation’s economic growth is correlated with political stability.
According to Sharif, according to Pakistan’s state-run Associated Press, “without political stability, even billions of dollars in the budget could not make a difference in improving the economic situation.”
According to the local newspaper Dawn, the South Asian country fell short of almost all of its economic goals put forth in the prior budget for the current fiscal year, which ends in June.
Due to frequent adjustments to the GDP growth forecasted in the previous year’s budget, the Pakistan Democratic coalition (PDM), a coalition of over 12 parties led by Sharif, has lost support from the public as a result of the current political and economic crises.
Following the country’s terrible floods, the 5% GDP growth that Sharif’s administration had first predicted was later revised downward to 2%. But for the current fiscal year, which ends this month, it has been lowered to 0.29%.
