Rs7,022b Budget Unveiled with Ambitious Revenue Target: Tax Exemption Limit for Salaried Class Reduced to Rs0.6m, Non-Filers Can Buy Properties
The PTI government targeted a sharp hike in tax revenues on Tuesday as it presented plans for Rs7,022 billion budget for the year 2019-20.
Around 30 percent greater in size than the previous year, the budget sets an ambitious Rs5,555 billion target for the Federal Board of Revenue (FBR) – a 25 per cent increase over the Rs4,435 billion target from the previous year which has been missed.
Meanwhile, non-tax revenue target has been set at Rs894.5 billion and budget deficit is estimated to be Rs3,560 billion.
On the other hand, the defence budget has been kept at the present level of Rs1,150 billion.
Presenting the budget, State Minister for Revenue Hammad Azhar forecast a budget deficit of 7.1 per cent of gross domestic product, after the gap in the current year blew out to 7.2 per cent.
“The first couple of years are going to be tough but then we will start reaping the fruits of our hard work,” Azhar said, promising to limit future borrowing.
The government expects to raise $2 billion from the sale of two liquefied natural gas (LNG) power plants, and another $1 billion from the auction of mobile licences, he said.
The government has already slashed its year to June 2019 growth forecast to 3.3 per cent from the 6.2 per cent predicted at the time of the last budget. The IMF’s estimates growth are around 2.9 per cent.
For the coming year to June 2020, the government expects growth at 4 per cent.
He said the ambitious increase in tax revenue would be combined with “unprecedented reduction in expenditure” by both the civil administration and the military to bridge the widening gap between the government’s revenue and expenses.
According to the budget documents, there is no increase in salary for the Grade 21 and 22 officials. However, there is 10 per cent increase for Grade 1 to 16 and 5 per cent ad hoc relief for Grade 17 to 20. Moreover, there is 10 per cent increase in pension.
Meanwhile, the minimum wage has been set at Rs17,500.
But the tax exemption limit has been reduced from Rs1.2 million to Rs0.6 million for salaried persons and Rs0.4 million for non-salaried.
On the other hand, non-filers are no more barred from purchasing property as they were previously not allowed to purchase property worth over Rs5 million.
Rs5,200 as FED [Federal Excise Duty] has been proposed on every 10,000 cigarettes with the Sales Tax on sugar increased to 17 per cent.
Other tax measures include
- Tax on marble industry to be increased to 17 per cent
- Tax on services to be introduced
- Tax on sugary beverages to be increased to 13 per cent
- FED on edible oil to be increased
- 17 per cent sales tax on ghee, oil etc
- FED increased by Rs2 per kg on cement
- FED not only on 1700c and above, but 2.5pc up to 1000cc, 7.5 on more than 2000cc cars
- Cotton etc will be slapped with 10pc tax
- Taxation on CNG to be increased
- Cottage industry: new definition is advised to include only those industries earning less than Rs2 million turnover per annum
As far as the provincial share in the federal taxes is concerned, Punjab will get Rs1611.36 billion, Sindh Rs 814.91 billion, Khyber Pakhtunkhwa Rs533.26 billion and Balochistan Rs264.98 billion.
An amount of Rs1,863 billion has been allocated for Public Sector Development Programme .
The government has also formed a new ministry to eliminate poverty, which will introduce programs for social safety. People benefiting from the Ehsaas programme include the poor, orphaned, homeless, and disabled sectors of the population.
Moreover, stipend through BISP scheme has been increased from Rs5,000 to Rs5,500.