With a target of 4.8% growth rate, the PTI government has unveiled the federal budget for the fiscal year 2021-22 to turn the direction of the country.
Next year’s total expenditure budget is almost 19 percent higher at Rs 8,487 billion than last year’s budgeted expenditure of Rs 7,136 billion. For FY22, the government has set the GDP growth target at 4.8 percent, Finance Minister Shaukat Tarin announced.
Tarin mentioned that 4-6 billion households will be given up to Rs5 lac interest-free loans. Every agriculture-based household will get interest-free loans worth Rs1.5 lac. Meanwhile Rs20 lacs would be given in low-interest loans for low-cost housing.
The present government targets to provide relief to the lower class of the country, hence this segment will be granted good incentives. The country has 65% of the population with the age group of below 30 years and the creation of job is necessary otherwise it will waste national advantage.
“Therefore, we want to ensure 6-7% growth over next few years,” Tarin added.
While announcing the budget, he further said that special economic zones (SEZs) will be used to create jobs which will also guarantee growth in exports.
The finance minister mentioned that PTI’s government has decided to provide tax relief package. Subsidy worth Rs3 lac rupee will be given. And for the first time, mortgage financing has been started.
The special plan for the abolition of circular debt would be introduced in the budget for the next financial year
“The government plans to reduce line losses through investment,” Tarin added. Moreover, an electric vehicle policy would also be announced.
Moreover, in the next fiscal year, the PTI government has increased the PSDP budget to Rs900 billion from Rs630 billion.
The finance minister further assured that the government would improve road infrastructure. Furthermore, it will invest in high return projects through PSDP.
During the announcement of next year’s budget, a national agriculture emergency programme was also announced regarding which the government has decided to enhance livestock on modern lines and is going to allocate Rs12 billion for the most important sector.
Dasu, Diamar-Bhasha and Mohmand dams are a part of the budget. Besides, Rs91 billion have been allocated for water resources. Moreover, Rs14 billion have been allotted for the Neelum Jhelum power project. The Minister stated that the ML-1 project will be completed in three packages.
Likewise, Rs22 billion have been allocated for coal-based power projects, Rs16.5 billion for Tarbela fifth extension and Rs118 billion for different power transmission lines.
For the fiscal year 2021-22, Rs16.5 billion have been allocated for Karachi-based projects. The federal government will grant Rs98 billion.
The government has allocated Rs40 billion for developmental projects in Gilgit-Baltistan. Meanwhile, Rs54 billion have been allocated for Khyber-Pakhtunkhwa. Rs 601 billion will be allotted to South Balochistan for uplift programs, he added.
Train also mentioned that opposition party PPP has 50 projects worth Rs2 trillion, which include railway, water, aviation, road and health schemes.
Pakistan is one of the 10 countries most hit by climate change, stated the federal minister.
He then highlighted PM Imran’s vision of planting trees and said that Rs14 billion have been allocated for the government’s vision of “One Billion Tree Tsunami.” Rs118 billion have been allotted under PSDP for the social uplift.
Non-tax revenues to rise by 22% during FY22, meanwhile federal expenditures to rise 15%. Whereas, $1.1 billion have been allocated for vaccine import under the budget.
Furthermore, at least Rs12 billion have been allocated for SMEs. Rs10 billion for the Kamyab Jawan programme and Rs66 billion will be allotted to HEC.
A self-assessment scheme would also be introduced in the next fiscal year. Individuals can prepare their own tax returns. Tarin mentioned that an e-audit system will be introduced and audit will be done by international auditors.
Tarin said that income and expenditure taxes would be main instruments. Technology will be used to identify new taxpayers.
The Federal Board of Revenue would not conduct audits without substantial information.
Moreover, all retail and wholesale transactions will be added in the tax net and the rich people would be urged to pay their due taxes. Providing relief, the finance minister said no taxes to be applied on salaried class.
The finance minister further said that gifts will be awarded on sales tax receipts through a lucky draw on monthly basis.
He also revealed that the country’s single window project will be introduced for fast-track clearings goods from ports. A special cell for the retail sector will be established by FBR.
On the other hand, Tarin announced regarding the auto sector that 850 CC cars will be exempted from federal excise duty and sales tax would be reduced. The government decided to reduce sales tax on electric vehicles from 17% to 1%.
For the telecom sector, federal excise duty has been reduced from 17% to 16%, the withholding tax will be reduced by 40%.
He further said by saying that the WHT from 12 documented sectors to be withdrawn, which include banking, Pakistan Stock Exchange, margin financing, air travel services, international transactions from debit and credit card.
- The WHT on mobile phone services has been reduced from 12% to 10%. The government plans to further reduce taxes on mobile phone services to 8%.
- Withholding tax on oil field services, warehousing services and collateral services have been reduced to 3% from 8%.
- Additionally, capital gains tax reduced from 15% to 12.5%. The capital gains tax reduced from 15% to 12.5%. The government plans to further reduce CGT in years to come.
- Tax rates for FMCG and refinery retailers have also been reduced by the incumbent government. Income tax and property tax has been removed.
- The government plans to set up five lac POS machines for tax credit. Withholding tax on import of books, magazines also exempted.
- The SMEs with a turnover of Rs100 million will be taxed 0.25%, while small-medium enterprises with a turnover of Rs100-250 million will be taxed 1.5% of the turnover.
- Services import through banking channels will be taxed at 1%. IT and IT exports will be given 100% tax credit.
- There will be no tax taken on turnover from SEZs. Special technology zone authority, zone developers and zone enterprises to get 10-year tax exemption.
- Additional customs duty and regulatory duty on 164 textile articles have been removed in the federal budget, these articles include yarn.
- The tariffs for the cotton value chain, polyester value chain and man-made fiber has been reduced.
- Road alloy and steel material were also exempted from additional customs duty and regulatory duty on these has also been reduced.
- Customs duty was removed from the disposable syringes industry. The dairy industry has also given tax relief.
- The government plans to export phones soon.
- The Customs department is working to end smuggling at borders.
- More than 74 departments will integrate under Pakistan single window project and it will prove to be a game-changer for Pakistan.
- Relief measures will be provided for the government employees, who will be granted 10% adhoc relief allowance.
- Pensioners will get 10% rise. Integrated allowance for Grade 1-5 has been raised from Rs450 to Rs900.
The finance minister concluded his speech by saying that all citizens will benefit in some way from the budget.