Ishaq Dar announces Rs14.46 trillion federal budget for FY 2023-24 with focus on economic stability, inclusive growth announced

ISLAMABAD, June 9 (SABAH): The federal budget for financial year 2023-24 with a total outlay of Rs 14460 billion has been announced with focus on economic stability, sustainable and inclusive growth as well as curbing inflationary pressures.

Minister for Finance and Revenue Senator Mohammad Ishaq Dar presented the budgetary proposals for next fiscal year in the National Assembly on Friday.

The National Assembly resumed its session at the Parliament House in Islamabad on Friday with Speaker Raja Pervaiz Ashraf in the chair. The session was also attended by Prime Minister Mian Muhammad Shehbaz Sharif. The Leader of the Opposition in the National Assembly Raja Riaz Ahmed Khan was also present in the session. 

The gross revenue receipts have been estimated at 12163 billion rupees for the next financial year. These include FBR tax revenue of 9200 billion rupees and non-tax revenue of 2963 billion rupees. The interest payments are estimated to be 7303 billion rupees. 1804 billion rupees have been set aside for defence affairs and services. Overall fiscal deficit has been estimated at 6924 billion rupees.

The budget envisages special initiatives for the uplift of agriculture, industries, and IT sectors, besides, relief for various segments of society including the salaried class.

As regards agriculture, the Finance Minister said that the limit of agri credit is being enhanced to 2250 billion rupees as compared to 1800 billion rupees of the outgoing fiscal year. Thirty billion rupees have been earmarked for shifting fifty thousand agriculture tube wells to solar energy. He said all taxes and duties on import of quality seeds are being abolished. Similarly, custom duty on saplings is being waived off. Combined harvesters are being exempted of all duties and taxes in order to promote their use in the field. He said that seeders, rice planters and dryers are also being exempted from duties and taxes to enhance rice production.

Ishaq Dar noted that agro industry can bring revolution in the rural economy. Five billion rupees have been allocated in the budget for the provision of concessional loans to this sector. He said it has been decided that the agro-based industrial units having a turnover of 800 million rupees will be exempted from all sorts of taxes for a period of five years.

Under Prime Minister’s Youth Business and Agriculture Loan Scheme, small and medium loans will be issued on easy installments. For this purpose, ten billion rupees have been earmarked for mark-up subsidy for the next fiscal year. Six billion rupees has been set aside for subsidy on imported urea fertilizer.

The Finance Minister said that small farmers will be provided with loans on low markup with the partnership of provincial governments. For this purpose, a substantial amount of ten billion rupees to increase agriculture production.

The Finance Minister said that a modest growth target of 3.5 percent has been set for the next fiscal year. He said the country will soon go to the general elections but instead of presenting an election budget we have prepared a responsible budget. He said we have chosen elements of real economy after hectic consultations because of which the country will move forward on the path of progress in the minimum time.

He that the turnover threshold of Small and Medium Industries has been increased from 250 million to 800 million rupees by increasing the tax concessions of the SMEs. He said SMEs Assan Finance Scheme has also been restored while establishing a Crediting Rating Agency for the SMEs has also been proposed.  

For Industry and Export sectors, the Finance Minister said that an export council of Pakistan is being constituted under the supervision of Prime Minister to take important decisions with regards to exports of the country.

He said sales tax has been exempted for local purchase through Online Market Place to promote exports of mineral and metals.  He said the minimum tax on all Listed Companies is being reduced from 1.25 percent to 1 percent while five percent regulatory duty is also being abolished on Synthetic Filament Yarn which is not manufactured in the country to promote the textile industry. Custom duty on Pet Scrap is also being decreased from twenty percent to eleven percent.

Ishaq Dar said two percent Final Tax for purchasing Immovable Property under Foreign Remittance by Overseas Pakistanis is also being abolished. He said Fast Track Immigration to facilitate Overseas Pakistanis will be provided at all airports in the country while a special scheme will be launched for giving major rewards to Remittance Cards Holder through a transparent draw.

The Finance Minister was confident that the IT sector will prove to be an engine of growth in the coming years. He said that at present, concessional 0.25 percent income tax is in place for promotion of IT exports. He said this facility will be continued till 30th June 2026.

He noted that free lancers have to face difficulties, while submitting monthly sales tax returns. He said free lancers have been exempted from sales tax registration and returns for annual exports worth 24,000 dollars in order to facilitate business environment. In addition, a simple one-page income tax returns form is being launched for them.

Ishaq Dar said IT and IT-enabled service providers will be allowed to import software and hardware equal to one percent of their exports without any tax. The limit of these imports will be fifty thousand dollars annually. He said it will be ensured to automated exemption certificates for the exporters of IT and IT services.

He announced the establishment of a Venture Capital Fund of five billion rupees for the IT sector. Sales tax on IT services within the precincts of ICT is being reduced to five percent from 15 percent. He said banks will be able to avail the concessional tax of 20 percent for the encouragement of loans in the IT sector. He said that fifty thousand IT graduates will be provided with professional training during the next fiscal year.

Ishaq Dar said ten percent regulatory duty on the import of second hand garments is also being abolished. Similarly, a new scheme of Micro Deposits for low income people is also being launched under National Savings from 1st of the next month.

For Energy Sector, the Finance Minister said the government is exempting the solar panel, inverter, batteries and relevant raw material from custom duty.

He said the government is also launching Bonded Bulk Storage Policy for Petroleum products to control shortage in their supply chain. Under this scheme, a Foreign Supplier will import crude oil and POL products through its own financial sources and store them in Bonded Bulk Storage in Pakistan and later the oil marketing company or any Refinery will be allowed to purchase these products from the Foreign Supplier in time of need.

Turning to the education sector, the Finance Minister said that sixty-five billion rupees have been earmarked for the current expenditures of Higher Education Commission and seventy billion rupees for its development expenditure.

The Finance Minister announced the establishment of Pakistan Endowment Fund for which five billion rupees have been earmarked. He said this fund will provide merit based scholarships to the students of high schools and colleges. He said our target is that no talented student remains deprived of education owing to lack of resources.

Ishaq Dar said ten billion rupees have been allocated to continue laptop scheme during the next fiscal year. Describing sports as an important component of education, he said five billion rupees are being set aside for promotion of professional sports in schools and colleges.

The Finance Minister said five billion rupees have been earmarked for women empowerment. This included skill development, easy loans for businesses and training programs. He said concession in taxes will also be given to women entrepreneurs.

The Finance Minister said that improvement in electricity generation and distribution system is also among the top priorities of the government. In this regard, the government has provided 107 billion rupees for improvement in power production and distribution. Similarly, twelve billion rupees will be provided for Jam-Shoro power plant having capacity to generate 1200 megawatts through coal.  Sixteen billion rupees have been allocated to expedite work on 500KV Pakistan-Tajikistan transmission line. Thirteen billion rupees have been allocated for power distribution from Sukki-Kinari, Kohala and Mahal Hydro Power plant and six billion rupees for Dasu Hydro power plant.

For Water Reservoirs, the Finance Minister said the government has allocated ten point five billion rupees for Momand Dam project.  Fifty-nine billion rupees for Dasu-Hydro Power project, twenty billion rupees for Diamer-Basha dam.  Four point eight billion rupees have been earmarked for Neelum-Jhelum Hydro power project, four point four-five billion rupees to enhance capacity of Tarbela Hydro Power and two point six billion rupees have been allocated for restoration of Warsak Hydro Power Station.

The Finance Minister announced a series of relief measures for the salaried class and pensioners. He said that 35 percent adhoc relief allowance will be given to the federal government employees of scale one to 16, while 30 percent adhoc relief will be given to the employees of scale 17 and above. He said that the pension has been increased by 17.50 percent. The minimum wage has been increased to 32000 rupees from 25000 rupees.

He said that mileage allowance has been enhanced by 50 percent, while additional charge/current charge/deputation allowance is being increased from 12,000 to 18,000 rupees. Orderly allowance is being enhanced to 25,000 from 17,500 rupees. There is an hundred percent increase in the special conveyance allowance for disabled raising the amount from 2000 rupees to 4,000 rupees. He said that constant attendant allowance military has been enhanced to 14,000 from 7000 rupees.

He said that EOBI pension has been increased to 10,000 rupees from 8500 rupees. He said that House Building Finance Corporation Scheme is being introduced for the indebted widows. Under this scheme the government of Pakistan will pay the loan of the widows to the tune of one million rupees. He said the deposit limit in the martyrs’ accounts at CDNS is being enhanced to 7.5 million rupees from five million rupees, while the deposit limit on Behbood Saving Certificates is also being enhanced to 7.5 million rupees.

Ishaq Dar announced that no new tax is being imposed this year. He said it is the effort of the government to provide maximum relief to the people. He said our efforts is to enhance employment opportunities and facilitate the businesses in order to promote exports which will help enhance our foreign exchange reserves.

Ishaq Dar said imposing tax on the affluent class is the main part of Pakistan’s taxation policy. A super tax was imposed during tax year 2022 for higher income groups. He said there is a proposal to gradually increase the rates of the super tax to achieve the purpose of progressive taxation. He said commercial importers have suggested an increase of 0.50 percent in the tax rate of imported goods. Besides, there is no proposal to increase tax on the goods falling in the category of already reduced tax rates.  In order to collect tax on in-kind dividends, there is a proposal to impose ten percent tax on listed and non-listed companies.  A tax of 0.6 percent is being imposed on the cash withdrawal of fifty thousand rupees and above by non-filers in order to promote documented economy in Pakistan. He said that withholding tax ratio is being increased from one percent to five percent for filers to discourage foreign currency outflow through banking channels, credit and debit cards, while for non-filers this ratio will be ten percent.

The Finance Minister said the GST ratio for leather and textile products tier one retailers is being enhanced from 12 percent to 15 percent. He said this tax will basically be charged on expensive branded textile and leather goods. He said this tax is being imposed on the segment of society which can afford to purchase the expensive items and it will not affect the common man.

Ishaq Dar also announced that the tax exemption status of merged districts is being expanded for another one year. The Finance Minister recalled that duties and taxes were capped on the import of old and used Asian made 1800 cc vehicles. He said now this capping is being abolished for vehicles of above 1300 cc.

Ishaq Dar further said that on the demand of glass manufacturing association, 15 to 30 percent regulatory duty is being imposed on the imported glass and related products in order to protect the local glass industry.