Finance Minister Muhammad Aurangzeb, during his budget address, announced a 10% increase in the salaries of government employees and officers across all grades (1 to 22), alongside a 7% rise in pensions. However, a 5% tax will now apply to annual pensions exceeding Rs. 10 million. Additionally, a new carbon levy of Rs. 2.5 per liter has been implemented on both petrol and diesel.
Estimated expenditure is Rs 16,286 billion:
The government has projected total ongoing expenditures for the upcoming fiscal year at Rs. 16,286 billion. A substantial portion of this, approximately Rs. 8,207 billion, is allocated for interest payments on loans.
It is proposed to keep Rs 1,055 billion for pensions. It is proposed to allocate Rs 971 billion for running government affairs.
For pensions, the budget proposes an allocation of Rs. 1,055 billion. The running of government affairs is estimated to require Rs. 971 billion.
Rs359 billion allocated for emergency and other expenses, Rs1,000 billion for development programs:
The budget sets aside Rs. 359 billion for emergencies and miscellaneous expenses. Crucially, the federal government plans to inject Rs. 1,000 billion into development programs to foster growth and infrastructure. Furthermore, Rs. 1,928 billion has been earmarked for grants and provincial funds.
Relief decision for the salaried class:
The budget brings considerable relief for the salaried class through adjusted income tax rates. For annual salaries between Rs. 6 lakh and Rs. 12 lakh, the tax rate will decrease from 5% to 2.5%, reducing the tax liability from Rs. 30,000 to Rs. 6,000. The tax rate on salaries up to Rs. 22 lakh has been lowered from 15% to 11%. For those earning between Rs. 22 lakh and Rs. 32 lakh, the tax rate sees a reduction from 25% to 23%.
A carbon levy of Rs. 2.5 per liter now applies to petrol and diesel. Moreover, furnace oil will also incur a carbon levy of Rs. 2,665 per million tonne, reflecting the Rs. 2.5 per liter rate.
Housing sector, property purchase product holding rate below 4 percent:
In a boost to the housing sector, the property purchase product holding rate has been reduced from 4% to 2.5%. E-commerce platforms will now be subject to an 18% tax, a measure intended to create a more level playing field for traditional businesses.
Financing of small industries Rs 100 billion, nine filers one percent tax:
The budget proposes significant support for small industries, allocating Rs. 100 billion for their financing. Additionally, a 1% tax will now be imposed on non-filers who withdraw money from banks. The government aims to discourage early retirement and enhance facilities for overseas Pakistanis.
Finance Minister Muhammad Aurangzeb, while addressing the budget session, said that it is an honor for me to present the budget.
Finance Minister Muhammad Aurangzeb expressed his honor in presenting the budget. He highlighted the government’s efforts in controlling inflation and noted the country’s economy is showing signs of improvement, a fact recognized by international organizations.
He lauded Pakistan’s significant achievements against adversaries this year and underscored the country’s increased international standing. The Finance Minister affirmed the government’s commitment to further economic improvement. He congratulated Pakistan’s political and military leadership for their successes in what he termed “the war of justice,” and expressed satisfaction that the feared mini-budget did not materialize.
Opposition uproar, budget copies torn:
During the budget presentation, opposition members staged a protest, creating a ruckus and tearing up copies of the budget document.
The Finance Minister also mentioned the elimination of political interference in electricity distribution companies and highlighted the Reko Diq gold and copper mines as crucial national assets, projected to generate $75 billion for Pakistan over 37 years.
45 government institutions and 40 thousand vacant posts eliminated:
The government is undertaking significant restructuring by merging or eliminating 45 government institutions and eliminating 40,000 vacant posts. Through the Benazir Income Support Program (BISP), cash assistance has reached 9.9 million families.
The IT export sector experienced a robust 21.2% growth in the last 10 months, reaching $3.01 billion, with plans to elevate IT exports to $25 billion in the new fiscal year. Remittances have also seen a substantial increase of $10 billion over two years. While cotton production has declined, the government aims to improve this sector. A sum of Rs. 15 billion has been allocated for the Sukkur-Hyderabad Motorway.
Water reserves will be increased on a war footing:
The budget emphasizes the critical need to increase water reserves urgently. The government commits to implementing water reserve projects despite limited resources, aiming for a rapid expansion of water storage capacity.
The Finance Minister noted Pakistan’s low tax-to-GDP ratio of just 10%, stressing the necessity to increase it to 14%. He reported a significant decrease in inflation and a 31% increase in remittances, alongside a $2 billion rise in the central bank’s reserves. He acknowledged that tough decisions were essential for economic betterment and mentioned that tax returns have been simplified.
Reduction in electricity prices for industries:
To support the industrial sector, the price of electricity for industries has been reduced. Furthermore, NTDC (National Transmission and Despatch Company) has undergone restructuring for improved efficiency.
18% sales tax imposed on solar panel imports:
A new 18% sales tax has been imposed on the import of solar panels. However, the government has decided against imposing any new taxes on fertilizers and agricultural chemicals. To enhance financial transparency, the distinction between filers and non-filers will be eliminated, with only those who submit wealth statements being eligible for financial transactions. Non-filers will lose the ability to purchase vehicles and properties.
Rs 39.9 billion allocated for education, Rs 14.3 billion for health:
The budget allocates Rs. 39.5 billion for 170 higher education projects and Rs. 14.3 billion for 21 health projects.
Rs 164 billion for Azad Kashmir, Gilgit-Baltistan, and merged FATA:
A total of Rs. 164 billion has been allocated for Azad Kashmir, Gilgit-Baltistan, and the merged FATA districts. Specifically, Rs. 48.48 billion is earmarked for Azad Kashmir and Gilgit-Baltistan, while Rs. 68 billion is designated for the merged FATA districts.
Rs 11 billion allocated for good governance:
The budget proposes an allocation of Rs. 11 billion to initiatives promoting good governance. Additionally, duties and taxes on pharmaceutical raw materials have been reduced by 5%, and duties on diagnostic kits have been cut from 10% to 5%.
