Introducing the Rs14.5 trillion budget

KARACHI – Ishaq Dar, the finance minister, unveiled the FY24 budget on Friday amidst continuous political and economic turmoil.

Important details

Public Sector Development Programme: Rs. 1,150 Billion; Higher Education Commission: Rs. 135 Billion Reserved; Health: Rs. 13,10 Billion; Railways: Rs. 33 Billion; Water Resources: Rs. 107 Billion; Special Initiatives of Prime Minister: Rs. 170 Billion; National Highways Authority: Rs. 157.50 Billion; Conversion of Agricultural Tubewells to Solar Power: Rs. 30,0 Billion; Prime Minister’s Laptop Scheme: Rs. 10,0 Billion
Azad Jammu and Kashmir: 60.90 billion; Planning Division: 24.89 billion; Poverty Alleviation and Social Protection: 500 million; Ministry of Energy: 54.55 billion; Climate Change: 4.5 billion; Merged Districts of KP: 57 billion; Azad Jammu and Kashmir: 60.90 billion;

Targets

Targets for the economy include: 3.5 percent economic growth, 6.54 percent budget deficit, 0.4 percent primary surplus, $30 billion in exports, $33 billion in remittances, and Rs. 9 trillion in tax revenue.

Agriculture

He said that Rs30 billion would be used to convert 50,000 wells to solar energy and that agricultural loans will grow to Rs 2,250 billion. He said, “All taxes and duties on the import of hybrid seeds have been slashed.”

According to him, the government also eliminated all taxes on combination harvesters as well as rice seeders, planters, and dryers. He said, “Agribusinesses with a turnover of Rs800 million will not be subject to taxes.”

He said that Rs6 billion had been set aside as a subsidy for the purchase of urea fertiliser and that Rs10 billion would go towards mark-up-free loans.

Information technology and services made possible by IT

He said that the administration made the decision to maintain the 0.25 percent income tax on IT exports until June 30, 2026. “Freelancer exporting IT services up to $24000 per year will be exempt from sales tax registration and returns,” the speaker said.

According to him, the government followed through on the suggestion to provide one-page tax returns for IT exporters. He said, “Exporters up to $50,000 are permitted to import duty-free software and hardware worth 1% of their exports.

He said that the taxes system has been mechanised. The “IT sector has been included in small and medium enterprises,” he said. According to him, Rs 5 billion had been set aside as venture capital for IT exporters.

According to him, the capital would lower the sales tax on IT services from 15 to 5 percent. If banks provide loans to promote IT, they will get a 20 percent profit-tax exemption, the speaker said. He continued by saying that a programme will be implemented to provide IT graduates with professional training.

Exports and Industry

He declared the creation of the Pakistan Export Council, headed by the Prime Minister. “Any online market place selling metals and minerals will be exempt from sales tax,” he said. According to him, the minimum tax rate for all listed corporations will drop from 1.25 percent to 10 cents.

He promised to reduce the 5 percent regulatory charge on locally produced synthetic filament yard. He said, “A 20 percent custom duty on scrap has been reduced to 11 percent.”

Money sent abroad

He declared that the moveable property bought using overseas remittances would not be subject to the 2 percent final tax. Those submitting remittances of at least $50,000 would get a diamond card, he said.

The following facilities would be provided to diamond card holders. Non-prohibited licence, free passport, preferred access to Pakistani embassies, and expedited immigration at Pakistani airports are only a few examples.

Commission on Higher Education

According to him, the government has allocated Rs135 billion for the promotion of higher education, of which Rs65 billion would go to the HEC and Rs70 billion will go towards development funding. “Pakistan Endowment Fund has been established with funds worth Rs5 billion to award scholarships for deserving students,” he said.

The government, he said, would provide 100,000 computers to meritorious pupils, and Rs. 10 billion will be allocated for the next year. “Rs 5 billion has been set aside for sports promotion in educational institutions,” he said.

He went on to declare that Rs 5 billion will be set aside for women’s empowerment and that this money would be used for business loans, tax breaks for businesswomen, and skill development.

According to Mr. Dar, the government has suggested a 50% tax decrease on profits from enterprises using the AOP for startups beginning after July 1, 2023. “Rs 10 billion has been set aside for organising youth specialised training,” he said.

Construction

If buildings are developed after July 1, 2023, the government would exempt builders from tax on business revenue by 10% or Rs. 5 million (whichever is greater), according to the minister. “The tax exemption have also been extended for a year,” he said.

Income Support Programme under Benazir

He said that Rs. 700 billion will be given to the BISP.

Corporation of Utility Stores

He said that Rs 35 billion had been set aside by the government for giving targeted subsidies for food products. He said, “Pakistan Baitul Maal would get Rs4 billion for the provision of medications to low-income stratum.

Additionally, he claimed that the 10 percent regulatory fee on the import of worn clothing had been decreased and that the sales tax on Unani remedies had been lowered to 1 percent.

Energy

Mr. Dar said that the government has waived the customs charge on the entry of raw materials for batteries and solar panel inverters. “Foreign suppliers will be able to store imported petroleum in bonded bulk storage — a new storage established — at zero custom duty,” he said.

Dar’s Comparative Analysis Presentation

Mr. Dar began by contrasting the economic figures between 2017 and 2022, then attacked the PTI administration.

Inflation reached 4 percent, food prices rose by 2 percent, and the stock market was the fifth-largest in 2017, according to Dar. He said, “Adding that the PML-N government successfully completed numerous projects, Pakistan was poised to become one of the 20 largest economies in the world.”

According to him, Pakistan’s economy fell from 24th place in 2018 to 47th place in 2022. He said, “The PTI administration owes it to the economy.

According to him, the primary deficit was 3.1 percent of the GDP, while the current account deficit (CAD) was 7.9 percent of the GDP in FY22. The national debt of Pakistan was Rs 25 trillion in 2019 and Rs 49 trillion in 2022, he said.

The circular debt, which the PML-N administration inherited with a balance of Rs 503 billion, increased to Rs 1148 billion in 2018. “It reached Rs2476billion in 2022,” he said.

According to him, the CAD dropped from 7.9 percent of the GDP in 2022 to around 7 percent in 2023. He said, “The current administration saved the nation from default.” At the conclusion of FY24, the CAD would drop to $4 billion, and the trade deficit will also shrink, he said.

He continued by stating that floods had cost the nation $30 billion in damages and that food prices had increased 14.3 percent globally in 2022. “Russia-Ukraine war, increase in oil and petrol prices, and increasing interest rates also added to rise in economic difficulties for the country,” he said.

According to him, the government cut the price of petrol and oil, which can have a negative impact on inflation. He said, “Forex reserves will also rise.” According to him, the government has pledged around Rs 2000 crore in support for farmers.

He declared that no additional taxes on business will be levied by the government in the next year.