ISLAMABAD, June 9, 2023: Amid ongoing political and economic crises, Finance Minister Ishaq Dar on Friday presented the budget for the fiscal year 2023-24 (FY24).
Salient features
• Defence: Rs1,804 billion
• Public Sector Development Programme: Rs1,150 billion
• Higher Education Commission: Rs135 billion set aside
• Health: Rs13.10 billion
• Railways: Rs33 billion
• Water Resources: Rs107 billion
• Special Initiatives of Prime Minister: Rs170 billion
• National Highways Authority: Rs157.50 billion
• Conversion of Agricultural Tubewells to Solar Power: Rs30 billion
• Prime Minister’s Laptop Scheme: Rs10 billion
• National Food Security: Rs8.85 billion
• IT sector: Rs6 billion
• Women Empowerment: Rs5 billion
• National Heritage and Culture Division: Rs540 million
• Karachi Greater Water Supply Scheme: Rs17 billion
• Karachi Coastal Power Project: Rs14.86 billion
• Pakistan Atomic Energy Commission: Rs26.10 billion
• Planning Division :Rs24.89 billion
• Poverty Alleviation and Social Protection: Rs500 million
• Ministry of Energy: Rs54.55 billion e
• Climate Change: Rs4.5 billion
• Azad Jammu and Kashmir: Rs60.90 billion
• Merged Districts of KP: Rs57 billion
Targets
• Economic growth: 3.5pc
• Budget deficit target: 6.54pc
• Primary surplus target: 0.4pc
• Export target: $30 billion
• Remittances target: $33 billion
• Tax collection target: Rs9 trillion
Agriculture
Agricultural loans would be increased to Rs2,250 billion, he said, adding that Rs30 billion would be spent on converting 50,000 wells to solar energy. “All taxes and duties have been slashed on the import of hybrid seeds,” he added.
The government also slashed all duties on combined harvesters and rice seeders, planters, and dryers, he said. “No taxes will be imposed on agribusinesses to get a turnover of Rs800 million,” he added.
A sum of Rs6 billion had been allocated for subsidy on import of urea fertliser, he said, adding that Rs10 billion would be spent on mark-up free loans.
Information Technology and IT enabled services
He said the government decided to continue the policy of 0.25pc income tax on IT exports till June 30, 2026. “Freelancer exporting IT services up to $24000 per year will be exempt from sales tax registration and returns,” he added.
The government complied with the proposal of one-page tax return service for IT exporters, he said. “Exporters up to $50,000 are allowed to import duty free software and hardware worth 1pc of their exports,” he added.
Moreover, the taxation system had been automated, he said. “IT sector has been included in small and medium enterprises,” he added. Rs5 billion had been allocated as venture capital fund for IT exporters, he said.
Sales tax on IT services would be reduced from 15pc to 5pc in the capital, he said. “Banks will be given 20pc exemption on taxes on profits if they give loans for promotion of IT,” he added. He went on to say that scheme would be rolled out to give professional training to IT graduates.
Industry and Exports
He announced the establishment of Export Council of Pakistan under the chair of PM. “Any online market place selling metals and minerals will be exempt from sales tax,” he added. The minimum tax on all listed companies would be reduced from 1.25pc to 10c, he said.
The 5pc regulatory duty on indigenously made synthetic filament yard would be slashed, he said. “A custom duty of 20pc on scrap has been decreased to 11pc,” he added.
Foreign Remittances
He said the immovable property purchased by foreign remittance would be exempt from 2pc final tax. “A diamond card will be issued to those sending remittances of at least $50,000,” he added.
The diamond card holders would be given following amenities i) non-prohibited license ii) gratis passport iii) preferential access to Pakistani embassies iv) Fast track immigration at Pakistani airports
Higher Education Commission
The government earmarked Rs135 billion for promotion of higher education including Rs65 billion for the HEC and Rs70 billion for development funds, he said. “Pakistan Endowment Fund has been established with funds worth Rs5 billion to award scholarships for deserving students,” he added.
He went on to say that the government would distribute 100,000 laptops among the deserving students, and Rs10 billion would be spent for the next year. “Rs5 billion has been allocated for promotion of sports in education institutes,” he added.
He continued by saying that Rs5 billion would be allocated for women empowerment, adding that these funds would be spent on skill development, loans for businesses, and tax exemptions for businesswomen.
Mr Dar said the government had proposed 50pc reduction in taxes for income through businesses through AOP for the startups starting after July 1, 2023. “Rs10 billion have been allocated for arranging specialised training of youth,” he added.
Construction
The minister said the government would relieve the builders of tax on business income by 10pc or Rs5 million (whichever is higher) if building are constructed after July 1, 2023. “The tax exemption have also been extended for a year,” he added.
Benazir Income Support Programme
As for the BISP, he said the BISP would be allocated Rs700 billion.
Utility Stores Corporation
He said the government had allocated Rs35 billion for providing targeted subsidy on food items. “Pakistan Baitul Maal will be provided Rs4 billion for providing medicines to low-income strata,” he added.
Moreover, he said sales tax on Unani medicines had been reduced to 1pc, adding that 10pc regulatory duty on import of used clothes had been slashed.
Energy
Mr Dar said the government had exempted the import of raw material for batteries and solar panel inverters of the custom duty. “Foreign suppliers will be able to store imported petroleum in bonded bulk storage – a new storage established – at zero custom duty,” he added.
— Comparative Analysis Presented by Dar —
Mr Dar started off by comparing the economic indicators of 2017 and 2022, followed by the bashing of the PTI’s government.
Dar said economic growth was 6.1pc, inflation at 4pc, and food inflation at 2pc, stock exchange was ranked fifth largest in 2017. “Pakistan was set to become one of the world’s 20 largest economies, adding that the PML-N government completed multiple projects,” he added.
Pakistan’s economy dropped from 24th spot in 2018 to 47th spot in 2022, he said. “The economy owes it to the PTI government,” he added.
The current account deficit (CAD) was 7.9pc of the GDP in FY22, while the primary deficit was 3.1pc of the GDP, he said. “Pakistan’s public debt was Rs25trillion in 2019 and it reached Rs49trillion in 2022,” he added.
The PML-N government inherited the circular debt of Rs503billion and it reached Rs1148billion in 2018. “It reached Rs2476billion in 2022,” he added.
The CAD reduced from 7.9pc of the GDP in 2022 to almost 7pc of the GDP in 2023, he said. “The incumbent government saved the country from default,” he added. The CAD will come down to $4billion at the end of the FY24, and trade deficit would also decrease, he said.
He went on to say that floods caused a damage of $30billion to the country, adding that food prices saw an increase of 14.3pc in 2022 worldwide. “Russia-Ukraine war, rise in oil and gas prices, and increasing interest rates also added to rise in economic difficulties for the country,” he added.
The government reduced oil and gas prices that could potentially the inflation down, he said. “Forex reserves will also increase,” he added. The government also announced over Rs2000crors for farmers, he said.
The government would not impose any new tax on industry in the next year, he said.