EDITORIAL: The federal finance minister, Muhammad Aurangzeb, presented in the National Assembly his and the Shehbaz Sharif-led government’s maiden budget constrained by the International Monetary Fund’s (IMF’s) prior conditionalities.
The budget proposals vividly reflect the government’s effort to comply with the IMF diktat that has been embraced and named ‘Home Grown’ as there is no ‘Plan B’, according to the finance minister, except seeking an IMF programme.
The dilemma that the national economy faces and the reasons for the present quagmire are well known and so is the solution.
The factor that has constantly been in play thus far has been the reluctance of our successive governments to end the elite capture of our economy and catch the proverbial bull by the horns by summoning enough courage and resolve to enforce the writ of the state. Now the economic situation has deteriorated to the level that no further dithering is possible and there is no other option but to do it.
The budget strategy for FY2024-25 is stated to be anchored in principles of sound fiscal and debt management, providing a pathway for economic revival and stability; outlining strategic directions for revenue generation and spending priorities of the government and laying the basis for addressing fiscal deficits and reducing inflationary pressures in the short to medium term.
In pursuance of this strategy the main objectives that the budget FY25 seeks to achieve are: (i) economic stability and growth through fiscal consolidation, (ii) bringing the public debt to GDP ratio to sustainable levels (level not defined), (iii) prioritising improvements in the balance of payments position, (iv) revitalising the private sector, fostering entrepreneurship, encouraging investment and promoting innovation to stimulate growth, (v) pro-poor initiatives to support the vulnerable, (vi) funneling more funds into the Public Sector Development Programme (PSDP) to improve service delivery/public good, (vii) education and skill delivery of youth, and (viii) integrating green and gender responsive budgeting into public finance management.
The total size of the proposed budget is Rs 18,877 billion that projects Rs 12,970 billion as the total revenue to be collected by the FBR for the federal Consolidated Fund and non-tax revenue of 4,845 billion rupees.
After adjusting for the provincial transfers from the Consolidated Fund, the net revenue receipts of the federal government would be of Rs 10,377 billion. A sum of Rs 8,500 billion is projected to be generated through bank and non-bank borrowings, net external receipts and privatisation proceeds of Rs 30 billion.
As against these resources, the federal government’s current expenditure alone would be of 17,203 billion rupees. Instead of curtailing the runaway current expenditure, this budget unfortunately proposes an increase of around 20 percent in the salaries and pensions of government employees, which would lay the justification for a similar increase in the salaries of personnel belonging to semi-government organisations and autonomous bodies setting in a round of inflation that has just begun to ease. This presents a glaring example of the ‘old habits die hard’ addiction of our governments of ‘living beyond means’.
Sales Tax continues to be the largest contributor to the pool of federal taxes projected at Rs 4,919 billion followed by income tax at Rs 5,512 billion. However, it is the latter that is expected to grow the most with more that 50 percent increase over last year’s revised estimates of Rs 3,721 billion. This projected increase, though suspect, is perhaps based on a host of significant upward revisions in rates of taxes, introduction of new category of taxpayers named as ‘Late Filers’ besides the existing categories of Filers and Non-Filers and a change in tax treatment for certain categories of taxpayers.
The exporters that had thus far enjoyed the ‘presumptive tax’ regime would now be subjected to the normal tax regime for businesses. This is bound to attract a severe pushback from exporters and it remains to be seen how steadfast would the government be in its resolve. Advance income tax rates on immovable property transactions have been significantly increased and made progressive on the basis of transaction values.
This measure would rake in substantial revenue for the government but carries the risk of slippage, if property transactions reduce significantly as a result of this levy.
Another impost on property transactions is a 5 percent Federal Excise Duty on commercial properties and first sale of residential properties. This measure is likely to be challenged in the court of law and would also receive a robust pushback from the elite whose properties are exempt from Section 7E of the income tax law.
A rather harsh measure is the increase in the maximum tax slab for income of non-salaried class of taxpayers like proprietorships and Association of Persons.
The Small and Medium Enterprises (SMEs) that the government is keen to bring into the formal sector from the informal economy is comprised of this category and this proposal would militate against the government’s declared objective.
It is generally believed that this measure has been proposed to deflect the pressure from the Fund to increase the tax on the salaried class, which the government did well to resist.
However, this is an extremely harsh proposal and would undermine the development of the SMEs in the formal sector.
The budget document is shorn of customary details, which perhaps would surface in due time when a discussion in parliament begins. Just before its presentation in the National Assembly and after its approval by the federal cabinet, the main ally of the Pakistan Muslim League-Nawaz (PML-N) government, Pakistan People’s Party of Parliamentarians (PPPP) decided to boycott the proceedings on grounds that they were not consulted in the budget exercise.
Later, they were successfully persuaded to attend the session, which they did reluctantly but obligingly. This episode strongly indicates that it may not be all smooth sailing for the government in parliament and it may have to accommodate its coalition partners on some proposals.
The thrust of the budget proposals remains consolidation, and rightly so. Although we are notoriously famous for changing course when we reach the last mile, it is, however, imperative that we stay the course and desist from taking any misstep that might possibly derail the whole process.
We hope that stern attitude of the lender of last resort and the fatigue of our time-tested friends to our perennial dependency on borrowings to support our habit of living beyond means would serve as an eye opener and make us mend our ways without any further loss of time.
The complacency that has been enveloping our economic conundrum for quite some time must be replaced with a strong sense of urgency and concern.
Copyright Business Recorder, 2024
LAHORE: The Punjab government will present its tax-free budget for the year 2024-25 on Thursday (today) with a focus on pro-people initiatives, mega projects and providing relief to the masses.
Punjab Finance Minister Mian Mujtaba Shuja-ur-Rehman will present the budget for the coming fiscal year in the Punjab Assembly after its approval from the Punjab Cabinet.
According to the Punjab Finance Ministry’s spokesperson here on Wednesday, no new tax would be levied in the provincial budget; the Punjab government was only focusing on the recovery of taxes already levied to increase provincial resources.
“Proper utilisation of resources and government assets would be ensured,” spokesperson added.
“Education, health and social security would be the top priority of the government in the Punjab budget while mega projects would be implemented through public-private-partnership initiatives. Moreover, special attention would be given to industry and agriculture sectors; to increase productivity in the agricultural sector, the government would address the difficulties faced by the farmers,” spokesperson added.
To provide relief to the people, spokesperson said, subsidies would be given to the food and transport sector while easy availability of solar systems would be ensured so that the people could save on electricity bills. The ministry’s spokesperson added that an increase in the salaries of government employees would be seen in the budget.
On investment, the spokesperson said that both local and international investors would be given equal opportunities to invest in Punjab and was confident that huge investment would be seen in the information technology sector, which would play a vital role in the economic development of the province. The spokesperson added that the problems facing manufacturers and the grievances of the business community would be redressed.
Copyright Business Recorder, 2024
LAHORE: While appreciating some of the pro-business measures in federal budget, the Lahore Chamber of Commerce and Industry (LCCI) on Wednesday showed concerns to some of the taxation measures that are bound to jack up cost of doing business besides decelerating economic activity.
In his address following the budget announcement, LCCI President Kashif Anwar gave mixed reaction, noting that while there are positive aspects, but there are significant challenges as well.
On this occasion, Senior Vice President Zafar Mahmood Chaudhry, Vice President Adnan Khalid Butt, former presidents Muhammad Ali Mian, Shahid Hassan Sheikh, Abdul Basit, former vice presidents Faheem Rehman Sehgal, Mian Abuzar Shad, Tahir Manzoor Chaudhry, Zeeshan Khalil, Executive Committee member Raja Hassan Akhtar, and former Executive Committee members Khadim Hussain and Haroon Haroon were also present.
President Kashif Anwar remarked that “apparently this is a difficult budget, which will be little beneficial for the economy.” He emphasised the need for consultation with the stakeholders, stating that “this budget will not provide the necessary support for the manufacturing and exports or the economy.” He pointed out that imposing federal excise duty (FED) on cement and property and removing import duty on glass and imposing FED on immovable property will hinder business operations. He stressed the importance of eliminating non-documented sectors alongside increasing documentation and questioned how construction would increase when capital gain tax has been imposed on real estate and property.
He further highlighted that raising the advance tax to 2.25 percent will increase cost for manufacturers and retailers. He warned that increasing tax rates in this manner invites tax evasion. He showed concerns about the budget and argued that excessive tax rates will negate potential benefits. He said that in those challenging times, increasing the sales tax rate from 12 percent to 18 percent for Tier 1 retailers will hinder documentation efforts. He urged for a simplified tax system, stating that no trader is afraid of paying taxes but is wary of excessive regulatory powers.
Addressing the increase in duties on electric cars, mobile and scrap, Kashif Anwar pointed out that imposing Additional Customs Duty on products not manufactured locally will raise the cost of doing business. He also emphasised the need to curb smuggling, and questioned the rationale behind increasing costs from 32,000 to 36,000 amidst declining inflation and an expanded Benazir Income Support Programme.
Kashif Anwar acknowledged positive steps for the solar sector but cautioned against implementing certain measures. He mentioned that many documents and SROs are yet to come and expressed concern that the current budget will exacerbate inflation and create hurdles for industrialisation and economic activity. He urged the government to consider proposals, take actions based on post-budget demands, and review their proposals to draft the finance bill with proper consultation.
He called for the government to reconsider the budget proposals and make necessary adjustments to foster economic growth and ease business operations.
Copyright Business Recorder, 2024
• No increase of duties on import of essential items.
• Providing relief for common man.
• Promote and protect domestic industry and enhance import-substitution.
• Tariff rationalization to reduce the cost of exemption.
• Promotion of Energy efficiency & Conservation.
• Incentives for agriculture sector.
• Facilitate the exports.
RELIEF MEASURE:
Exemption of ACD on raw materials of Fluids and Powders for use in Hemodialyzers.
Exemption of Customs duties on Bovine lipid extract surfactant.
REVIEW OF REGULATORY (RD)REGIME:
Levy / increase of RD on certain items to encouraging local manufacturing.
Rationalization of RD on import of new and used vehicles.
Increase / levy of RD on flat rolled products of iron and non-alloy steel.
Withdrawal of exemption of RD on import of ground nuts and margarine imported by Food Confectionary.
Continuation of RD on import of Chloroparafins liquid.
Withdrawal of RD on import of Sliver cans and Lollipop sticks.
REVIEW OF EXEMPTION REGIME:
Withdrawal of concession of customs duties on import of fresh & dry fruits.
Review exemption of duties on import of inputs for Home Appliances.
Withdrawal of concessions of duties on import of Hybrid Vehicles.
Reduction in concession of customs duties on import of Electric vehicles having value above US$ 50,000.
Incentives for manufacturing of Solar Panels and Allied Equipment.
Extension in scope of exemptions on import of machinery and equipment for farming and processing of Fish/Shrimp and Seafood.
TARIFF RATIONALIZATION:
Increase of Customs duty on Import of Containers for Aerosol Products.
Rationalization of Customs duty on import of parts of submersible pumps.
Rationalization of Customs duties on import of Wheat, Sugar, HSD, LNG.
Streamlining the imports of Aviation Related Good.
MISCELLANEOUS:
Levy of Additional Customs Duty on localized auto parts to incentivize local manufacturing sector.
Creation of new PCT codes for Rice Flour, Night vision goggles, Blood Collection Tubes, Solar Cable, Tyre Tube Valves to facilitate trade.
LEGISLATIVE CHANGES:
Definitions of “Nuclear Material” and “Radioactive Material” included, for implementation of National Nuclear Detection Architecture (NNDA) regime.
Establishment of Directorate General of National Targeting Centre (NTC), as a national single window of enforcement for all LEAs and Directorate General of Trade Based Money Laundering for cognizance of offences related to trade-based money laundering.
Officers of National Command Authority (NCA) and Pakistan Nuclear Regulatory Authority (PNRA) empowered to implement and enforce Customs Act.
Intelligence Bureau (lB) added in the list of Government agencies mandated to assist Customs in investigations.
Power for extension of detention period assigned to Additional Collector or Additional Director for smooth functioning.
Two new penal clauses are proposed to take cognizance of offences related to nuclear and radioactive material.
Rationalization of pitch of penalty for the importers seeking clearance of declared confiscated goods against payment of redemption fine.
Enhanced prescribed penalty against a police officer who having seized goods fails to deliver such goods to custom house.
Penalties enhanced to deter smugglers and miscreants from attacking Customs personnel, in view of recent attacks on Customs staff.
To deter the possibility of illegal removal and pilferage of smuggled goods liable to confiscation placed in the custody of owner, penal provision is proposed.
Changes are made with the objective of making the system more efficient by accelerating the disposal of pending cases in the Customs Appellate Tribunal.
Changes are made with a view to ensure that the cases are swiftly decided in the High Courts and also to meet the principles of natural justice and fair trial.
Strengthening the provision of Alternate Dispute Resolution mechanism.
SALIENT FEATURES BUDGET 2024-25 SALES TAX ACT 1990
The proposed budgetary measures pertaining to Sales Tax for FY 2024-25 are:
Withdrawal of various exemptions/zero rating and reduced/fixed rates.
Mobile phones to be taxed at standard rate (other than mobile phones valuing exceeding US$ 500 which will remain chargeable to existing rate of 25%).
Enhancement in reduced rate of sales tax from 15% to 18% on supplies made by the POS retailers dealing in leather and textile products.
withholding regime for lead, coal, scrap of paper and plastic, silica etc.
Iron and steel scrap to be exempted from levy of sales tax.
A phased withdrawal of exemption granted to ex-FATA/PATA.
Board empowered to fix minimum price of the goods falling under Third Schedule.
Streamlining and strengthening the provisions related to tax fraud.
Changes in the legal provisions related to assessment and audit.
Zero-rating of petroleum products is being converted into exemption.
Rate of default surcharge is to be aligned with the SBP’s policy rate of KIBOR plus 3%.
SALIENT FEATURES BUDGET 2024-25 INCOME TAX ORDINANCE 2001
REVENUE MEASURES:
The tax rates for non-salaried individuals and associations of persons and salaried individuals have changed. There is no income if annual income is up to Rs.600,000. Beyond this threshold, tax rates for non-salaried individuals have five taxable slabs with progressive tax rates ranging from 15% to 45%. For salaried individuals, beyond the threshold of Rs.600,000 per annum, there are five taxable slabs ranging from 5% to 35%.
At present, non-filers are subjected to higher tax rates to make their cost of doing business higher as well as to compel them to file their returns. Now a new tax rate for a new category of persons who are late filers i.e. they become filers after the due date of filing of return only for the sake of a specific transaction to avoid higher rates for non-filers. For such late filers a new tax rate is being introduced which is higher rate as compared to filers but lower than the non-filers.
Progressive tax rates on purchases and sales of properties, categorized into three categories, namely, one, filers, two, late-filers, and three, non-filers.
a. On purchase of property by filers, the rates of tax would be 3% for values of properties up to 50 million, 3.5% for values of properties between 50 million and 100 million, and 4% for value of properties above 100 million. Late-filers would face slightly higher rates: 6%, 7%, and 8% respectively for the same property value brackets. Non-filers would experience significantly higher rates, set at 12% for properties up to 50 million, 16% for 50-100 million, and 20% for properties exceeding 100 million.
b. The proposed progressive advance tax rates at source for filers on sale of immovable property are 3% for properties valued up to 50 million. For properties valued between 50 million and 100 million, the withholding tax rate is 4%, and for properties valued above 100 million, the rate is 5%. For non-filers, the rate is 10% for properties of any value. Further, for late filers, the rate of tax will be 6%,7% and 8% respectively depending on the value of property.
c. A flat 15% rate of tax on gains from the disposal of immovable property acquired on or after 01st July, 2024 by filers regardless of the holding period is proposed, and for non- filers, progressive tax rates based on the prescribed slab rates in Division I of Part I of the First Schedule, with a minimum tax rate of 15% is proposed.
At present, capital gains on sale of securities is taxed on the basis of holding period with maximum rate at 15% and no tax if the holding period exceeds 06 years. Now, for the securities acquired on or after 01 July, 2024, the capital gain on sale of such securities will be taxed at flat rate of 15% for filers, and for non-filers, the gain will be taxed at normal rates with minimum rate of 15% and maximum rate of 45%. Further capital gains income from mutual funds and collective investment schemes is also enhanced from 10% to 15%.
Dividend income from mutual funds is taxed @ 15% at present. However, in order to reduce the arbitrage between individual persons deriving income from profit on debt and persons earning dividend income from mutual funds deriving income from profit on debt, it is proposed that rate of dividend derived from a mutual fund which earns 50% or more of its income from profit on debt be enhanced from 15% to 25%.
At present, persons deriving income from exports have to pay 1% tax on their export proceeds which is final tax. On the principle of horizontal equity that taxpayers with equal income should pay equal tax, it is proposed income from exports be subjected to normal rates with one percent tax collection on their export proceeds be treated as minimum tax.
At present, persons who do not file return even in response to notice and their names are included in the income tax general order have to face blocking of their sims and disconnection of their utility connections. Now it has been proposed to bar exit from Pakistan of such persons with exceptions for Hajj and Umrah travelers, minors, students, overseas Pakistanis and such other classes of persons as notified by the Board. In case the implementing agencies do not block sims or disconnect utility connections or not comply with bar on foreign travel, penalty of Rs.100 million will be imposed upon the implementing agency for first default and Rs.200 million for each subsequent default. Penalties and prosecutions are proposed for entities failing to fully disclose relevant particulars or submitting incomplete information in their tax returns or failure to file return on discontinuation of their business. Further, penalty of sealing of shop is being proposed for traders and shopkeepers who fail to register under a scheme such as Tajir Dost Scheme. Further, failure to register by a shopkeeper or trader is proposed to be made an offence punishable on conviction with imprisonment for six months or with fine, or both.
The facility of exemption from withholding tax by issuing an exemption certificate on supply of goods and for certain other transactions is being converted into a reduced rate certificate for ensuring documentation of the value chain.
Advance tax rate on profit on debt for non-filers is being enhanced from 30% to 35% to increase cost of non-compliance.
At present, advance tax is collected on sale to dealers, distributors, wholesalers and retailers of certain specified sectors. Now it is proposed that such tax will be collected from all sectors of the economy so that it is expanded to the entire supply chain comprising all distributors, wholesalers, dealers and retailers with the aim to document the traders. Further, the rate for non-filers for dealers, distributors, wholesalers is being enhanced from 0.2% to 2% and for retailer non-filers from 1% to 2.5% so that with the purpose of documentation of traders and to discourage non-filing.
In order to tap the true potential of income tax at import stage and to check underdeclaration by importers, the Board is proposed to be empowered to notify minimum value for calculation of tax at import stage.
The prices of motor vehicles have substantially increased, therefore in order to capture true potential of tax it is proposed that basis of tax collection may be changed from engine capacity to percentage of value in cases of all motor vehicles. Moreover, it is also proposed that percentage of tax collection may also be increased in cases of vehicles having engine capacity of more than 2000cc.
a. Federal Government subsidize certain utilities for the consumers and pay to the utility companies and other companies certain amount of revenue in lieu of subsidy to the consumers. As the subsidy is income in the hands of such companies, the exemption to receipts from subsidies is proposed to be withdrawn on the principle of horizontal equity.
b. On the principle of horizontal equity, it is proposed that the reduced rate of 1 % on supply of cigarettes by distributors may be enhanced to 2.5%.
14.?Allocation of Advertisement Expense for Brand to a Non-Resident Associate Claiming Royalty
The expense equal to 25% of the total advertisement expense of the locally incorporated subsidiary is proposed to be shared with the non-resident associate who is also receiving royalty payment from Pakistan.
At present the default surcharge rate is 12% per annum which is significantly lower than the interbank rate and the low rate is a hindrance in recovery of tax arrears. It is therefore proposed that the default surcharge rate be increased to KIBOR rate plus 3% per annum.
RELIEF MEASURES:
a. Five years exemption from tax on income and from withholding taxes with effect from 1st day of July, 2018 was provided to FATA/PATA up to 30th day of June, 2023 which was extended for one year up to 30th day of June, 2024. It is proposed that further exemption from income and withholding taxes may be extended for another one year up to 30th day of June, 2025.
b. Extension in the period for adjusting unadjusted business losses from six to ten years for Pakistan International Airlines Corporation Limited (PIACL) to support its privatization.
STREAMLINING MEASURES:
a. Tax credit under section 65F applies solely to revenue derived from coal mining activities, preventing coalminers from claiming it on their entire income, including interest income.
b. AOPs with turnovers of Rs. 300 million or more would need to submit audited financial statements to discourage misuse and promote transparency and non-compliance would render members’ share income taxable.
c. The proposal requires persons paying advance tax to substantiate their estimates of income with documentary evidence to avoid rejection of their advance tax estimates.
d. An explanation is added to the effect that super tax is leviable on banking companies for tax year 2023 and for subsequent years.
e. The provisions pertaining to income of banks is clarified so that tax treatment for banks remain the same and the deductions allowed from income remain the same as before this bill.
f. A saving clause is promulgated to ensure that appeals, references, or revisions initiated before the enactment of the Tax Laws Amendment Act, 2024 are adjudicated based on the legal framework existing prior to the said Act.
SALIENT FEATURES BUDGET 2024-25
FEDERAL EXCISE ACT 2005
The proposed budgetary measures pertaining to Federal Excise Duty (FED) for FY 202425 are:
Imposition of FED on acetate tow @ Rs. 44,000 is proposed.
Imposition of FED on nicotine pouches @ Rs. 1200 per kg.
enhancement of FED on e-liquids is also proposed.
FED @ Rs. 15 per kg on supply of sugar to manufacturers.
The rate of FED on cement is being enhanced from Rs. 2 per kg to Rs. 3 per kg.
FED on commercial properties and first sale of residential properties @ 5%.
Rate of FED on filter rod to be enhanced from Rs.1500 per kg to Rs.80,000 per kg.
power to seal business premises of retailers selling illicit cigarettes.
Exemption from FED to diplomats and diplomatic mission.
Price threshold for local manufactured cigarettes increased from Rs. 9,000 to Rs.12,500.
Copyright Business Recorder, 2024
**CUSTOMS ACT, 1969 (IV OF 1969)**
Clause 3 (1) (a) Seeks to add new clause in section 2 of the
Customs Act, 1969 to define "Nuclear Material".
Clause 3 (1) (b) Seeks to add new clause in section 2 of the Customs Act, 1969
to define "Radioactive Material".
Clause 3 (2) Seeks to insert a new section 3CCD in the Customs
Act, 1969
to establish Directorate General of National
Targeting Centre.
Clause 3 (3) Seeks to insert a new section 3CCE in the Customs
Act, 1969 to establish Directorate General of Trade
Based Money Laundering.
Clause 3 (4) Seeks to substitute sub-section (1) of section 5 to align
Customs Act, 1969 with section 8 of FBR Act, 2007.
Clause 3 (5) Seeks to amend section 6 of the Customs Act, 1969
in order to empower the officers of National
Command Authority and Pakistan Nuclear
Regulatory Authority operating in National
Nuclear Detection Architecture to implement and enforce
Customs Act.
Clause 3 (6) Seeks to amend section 7 of the Customs Act, 1969
to include Intelligence Bureau, in the list of departments
which are mandated to assist Customs whenever requested.
Clause 3 (7) Seeks to amend section 17 to assign the power to
extend the statutory period of detention of goods,
to Additional Collector or Additional Director for
smooth functioning.
Clause 3 (8) Seeks to amend sub-section (5) of section 19, to give
continuity to the notifications issued under section 19
during the financial year.
Clause 3 (9) (a) Seeks to amend third proviso of sub-section (1) of
section 81, to insert Publication Valuation Ruling (PVR)
in addition to Valuation Ruling (VR), where no
provisional determination of value shall be allowed.
Clause 3 (9) (b) Seeks to amend third proviso of sub-section (1) of
section 81, to insert Publication Valuation Ruling (PVR)
in addition to Valuation Ruling (VR), where no
provisional determination of value shall be allowed, even
if revision is pending under section 25D.
Clause 3 (10) (a) Seeks to insert two new penal clauses (v) & (vi) in
S.No.8 of the Table of section 156 (1), to take cognizance
of offences related to nuclear and radioactive material.
Clause 3 (10) (b) Seeks to amend S.No.9 of the Table of section 156 (1) to
rationalize the pitch of penalty for the importers seeking
clearance of declared confiscated goods against payment of
redemption fine.
Clause 3 (10) (c) Seeks to amend S.No.83 of the Table of section 156 (1) to
enhance the penalty from Rs.2,000 to Rs.50,000 in case of
failure to deposit seized goods in the nearest custom house
within the stipulated time limit for disposal.
Clause 3 (10) (d) Seeks to amend S.No.85 of the Table of section 156 (1) to
enhance penalty from twenty-five thousand rupees to
not less than one hundred thousand rupees, on a
person assaulting customs officers/officials.
Clause 3 (10) (e) Seeks to add new penal clause in S.No.89 of the Table of
section 156 (1) to deter the possibility of illegal removal and
pilferage of smuggled goods.
Clause 3 (10) (f) (i) Seeks to amend S.No.90 of the Table of section 156 (1), to
rationalize the pitch of penalty for the importers seeking
clearance of declared confiscated goods against payment of
redemption fine.
Clause 3 (10) (f) (ii) Seeks to add new penal clause in S.No.90 of the Table of
section 156 (1), to deter the possibility of illegal
removal and pilferage of goods other than smuggled goods.
Clause 3 (11) Seeks to substitute section 194, to accelerate the
process and enhance efficiency of Customs
Appellate Tribunals for disposal of pending cases.
Clause 3 (12) Seeks to substitute section 194A, to accelerate the process
and enhance efficiency of Customs Appellate Tribunals for
disposal of pending cases.
Clause 3 (13) Seeks to substitute section 194B, to accelerate the process
and enhance efficiency of Customs Appellate Tribunals for
disposal of pending cases.
Clause 3 (14) Seeks to omit section 194C, for being superfluous in
view of proposed changes in section 194, 194A and 194B.
Clause 3 (15) Seeks to substitute section 195C, to make the ADRC
system more effective forum for settlement of
disputes pending at appellate fora.
Clause 3 (16) Seeks to substitute section 196, to make the system more
efficient by accelerating the disposal of pending cases
at the High Courts.
Clause 3 (17) (i) Seeks to amend First Schedule to create new PCT code
for rice flour.
Clause 3 (17) (ii) Seeks to amend First Schedule to rationalize customs
duty on high speed diesel (HSD) and LNG
Clause 3 (17) (iii) Seeks to amend First Schedule to correct the description of
PCT code 2930.9091.
Clause 3 (17) (iv) Seeks to amend First Schedule to create new PCT code for
Polyol blended with HCFC141b or HCFC-142b.
Clause 3 (17) (v) Seeks to amend First Schedule to increase customs duty on
containers for aerosol products.
Clause 3 (17) (vi) (a) Seeks to amend First Schedule to exempt customs duty on
parts of submersible pumps
Clause 3 (17) (vi) (b) Seeks to amend First Schedule to the to create new
PCT code for Valves used in tyre tubes
Clause 3 (17) (vii) Seeks to amend First Schedule to the to create new
PCT code for solar cables
Clause 3 (17) (viii) (a) Seeks to amend First Schedule to the to create new
PCT code for Night vision goggles
Clause 3 (17) (viii) (b) Seeks to amend First Schedule to the Customs Act to create
new PCT code for Blood collection tubes
Clause 3 (17) (ix) (a) Seeks to amend PCT code 9908 of First Schedule for
substituting the words "Federal Government" with the words
Minister Incharge to ensure donations and gifts are granted
exemption without the need to seek approval of the Cabinet,
with imposition of certain conditions to avoid misuse.
Clause 3 (17) (ix) (b) Seeks to amend PCT code 9917 of First Schedule to
streamline the exemptions and extending the scope of import
of ship bunker oil to operating companies of the concession
holders and their contractors and sub-contractors.
Clause 3 (17) (ix) (c) (i) Seeks to amend PCT code 9919 of First Schedule to delegate
power to extend time-limit for re-export, further
six months, to Chief Collector of Customs to avoid
operational delay and ease of doing business.
Clause 3 (17) (ix) (c) (iiii)Seeks to amend PCT code 9921 of First Schedule to insert
provision allowing duty paid containers used for
transportation of export cargo by the exporters, without
payment of duty and taxes.
Clause 3 (17) (ix) (d) Seeks to delete PCT code 9932 of First Schedule to avoid the
misuse of temporarily imported goods and evasion of
duty and taxes
Clause 3 (18) (A) (i) Seeks to amend in serial 1 (k) of Part-I of Fifth Schedule to
expend scope of exemption of customs duties on import
of fish or shrimp farming and seafood processing
machinery and equipment.
Clause 3 (18) (A) (ii) Seeks to amend serial 21 of Part-I of Fifth Schedule
to exempt customs duties on import of machinery,
equipment and inputs for manufacturing of solar
panels, inverters and batteries etc.
Clause 3 (18) (A) (iii) Seeks to amend serial 23 of Part-I of Fifth Schedule to
rationalize duty structure on bare MCPCB and Stuffed
MCPCB.
Clause 3 (18) (B) Seeks to add new serial 41 in Table-C of Part-II of Fifth
Schedule to exempt from customs duties "Bovine
Lipid Extract Surfactant"
Clause 3 (18) (C) (i)
& (ii) Seeks to amend preamble of Part-III of Fifth Schedule
to make corrections in the preamble.
Clause 3 (18) (C) (iii) (aSeeks to amend Part-III of Fifth Schedule to exempt customs
duties on import of live-stock for research purposes.
Clause 3 (18) (C) (iii) (bSeeks to delete Sr. Nos. 4, 6, 11,12,13 and 14 of Part-III of
Fifth Schedule to withdraw concession of customs duties on
import of fresh and dry fruits and rationalize tariff
structure on import of wheat and sugar.
Clause 3 (18) (C) (iii) (cSeeks to amend serial 116 of Part-III of Fifth Schedule to
review the exemption of inputs for home appliances.
Clause 3 (18) (D) Seeks to amend Part-V (A) of Fifth Schedule to withdraw
concession on import of electric vehicles of value exceeding
US$ 50,000.
Clause 3 (18) (E) Seeks to amend Part-VI of Fifth Schedule to streamline the
conditions regarding imports of Aviation related goods.
Clause 3 (18) (F) (i) Seeks to amend Table-A, Part-VII of Fifth Schedule
to exempt customs duties on import of Live (baby/
brood stock) fish and shrimp/prawns for breeding and
production in commercial farms and hatcheries.
Clause 3 (18) (F) (ii) Seeks to delete Sr. Nos. 11 and 13 of Table-B of Part-VII of
Fifth Schedule to the Customs Act to rationalize tariff
structure on import of HSD and LNG
SALES TAX ACT, 1990
Clause 5 (1) (a) Seeks to substitute clause (3) of section 2
Clause 5 (1) (b) Seeks to substitute clause (4) of section 2
Clause 5 (1) (c) Seeks to substitute
Clause 5 (1) (d) Seeks to insert new clause (15A) after clause (15)
of section 2
Clause 5 (1) (e) Seeks to substitute clause (37) of section 2
Clause 5 (1) (f) Seeks to add the expression "or the time when any
payment is
received by the supplier in respect of that supply,
whichever is earlier" after the word "supply" occurring at
the end, in sub-clause (a) of clause (44) of section 2
Clause 5 (1) (g) (i) Seeks to substitute the word "federal" the word "central"
in sub-clause (d) of clause (46) of section 2
Clause 5 (1) (g) (ii) Seeks to insert the expression ", including those as
specified in the Third Schedule," after the word
goods, occurring for the first time, in the first proviso,
after sub-clause (j), in clause (46) of section 2
Clause 5 (2) Seeks to omit sub-section (11) of section 3
Clause 5 (3) Seeks to omit section 11
Clause 5 (4) Seeks to substitute section 11B
Clause 5 (5) Seeks to insert new sections 11D, 11E, 11F and 11G after
section 11C
Clause 5 (6) (a) Seeks to substitute the words "issue an order of blacklisting"
for the word "blacklist" in sub-section (2) of section 21
Clause 5 (6) (b) Seeks to add new sub-section (5) after sub-section (4) of
section 21
Clause 5 (7) Seeks to substitute sub-section (3) of section 23
Clause 5 (8) Seeks to substitute section 25
Clause 5 (9) Seeks to insert new section 25AB after section 25AA
Clause 5 (10) Seeks to insert new sub-section (2A) after omitted
sub-section (2) of section 26
Clause 5 (11) (a) Seeks to insert the expression " (1)" after the marginal
heading in section 33
Clause 5 (11) (b) (i) Seeks to substitute column (2) against S. No. 11 of
section 33
Clause 5 (11) (b) (ii) Seeks to substitute column (2) against S. No. 13 of
section 33
Clause 5 (11) (c) (i) Seeks to insert the words "as may be prescribed" after
the word "confiscation" in clause (i), in column (2)
against S. No. 23 of section 33
Clause 5 (11) (c) (ii) Seeks to add the words "shall be liable to be sealed by an
officer of Inland Revenue in the manner prescribed" for the
words "be sealed for a period not exceeding fifteen days" in
clause (iii) in column (2) against S. No. 23 of section 33
Clause 5 (11) (d) Seeks to add words "shall be liable to be sealed by an officer
of Inland Revenue in the manner prescribed" for the words
shall be sealed till such time he integrates his business in the
m
(2) against S. No. 25 of section 33
Clause 5 (11) (e) (i) Seeks to insert the expression "or sub-section (4) of section
40C" after the expression "section 3," in column (1)
against S. No. 25A of section 33
Clause 5 (11) (e) (ii) Seeks to add the expression "and sub-section (4) of section
40C" after the expression "section 3," in column (3)
against S. No. 25A of section 33
Clause 5 (11) (f) Seeks to add new S. No. 25AA after S. No. 25A of
section 33
Clause 5 (11) (g) Seeks to insert the words "as may be prescribed"
occurring for
the first time, after the word "confiscation" in column
(3) against S. No. 26 of section 33
Clause 5 (11) (h) Seeks to insert the words "as may be prescribed"
occurring for the first time, after the word "confiscation"
in column (3) against S. No. 27 of section 33
Clause 5 (11) (i) Seeks to add new sub-section (2) after the TABLE in
section 33
Clause 5 (12) Seeks to substitute the words "KIBOR plus three" for
the word "twelve" in clause (a) of sub-section (1) of
section 34
Clause 5 (13) Seeks to add new sub-sections (4) and (5) after
sub-section (3) in section 40C
Clause 5 (14) Seeks to substitute the word "June" for the
word "September" in sub-section (4) of section 43A
with effect from 16th day of June, 2024
Clause 5 (15) Seeks to insert the words "of tax" after the word
assessment in sub-section (1) of section 45B
Clause 5 (16) Seeks to insert the expression ", excluding the order of
blacklisting under sub-section (2) of section 21," after
the word "order" in sub-section (1) of section 46
Clause 5 (17) Seeks to insert new section 47AB after section 47A
Clause 5 (18) Seeks to insert the words "in aggregate" after the
word "rupees" in sub-section (1) of section 73
Clause 5 (19) Seeks to add new serial number 51 and entries relating
thereto in columns (2) and (3) after serial number 50 in
column (1) in the Third Schedule
Clause 5 (20) Seeks to omit serial numbers 12, 16, 17 and 21 and entries
relating thereto in column (2), in column (1) of the Fifth
Schedule
Clause 5 (21) (A) (i) Seeks to omit serial numbers 13,15, 32, 86, 87, 88, 89, 90,
96, 97, 98, 112, 120,151,152, 166, 169, 170 and 174
and entries relating thereto in columns (2) and (3), in
column, in Table-1 of the Sixth Schedule
Clause 5 (21) (A) (ii) Seeks to omit the words "imported by or" in column
(2) against serial number 165 of the Sixth Schedule
Clause 5 (21) (A) (iii) Seeks to add new serial numbers 175 and 176 and entries
relating thereto in columns (2) and (3) after omitted serial
number 174, in column (1), in Table-1 of the Sixth Schedule
Clause 5 (21) (B) (i) Seeks to omit serial numbers 7 and 21 and entries relating
thereto in columns (2) and (3), in column (1), in Table-II
of the Sixth Schedule
Clause 5 (21) (B) (ii) Seeks to add new serial numbers 56 and 57 and entries
relating thereto in columns (2) and (3), after serial number 55
in column (1), in Table-II of the Sixth Schedule
Clause 5 (22) (i) Seeks to omit serial numbers 58, 66 and 73 and entries
relating thereto in columns (2), (3), (4) and (5), in column
(1) in Table-I in the Eighth Schedule
Clause 5 (22) (ii) Seeks to substitute serial number 77, in column (1) in Table-I
in the Eighth Schedule
Clause 5 (22) (iii) Seeks to omit "and medicaments as are classifiable under
chapter 30 of the First Schedule to the Customs Act, 1969
(IV of 1969) except the following, even if medicated or
medicinal in nature, namely:-(a) filled infusion solution
bags imported with or without infusion given sets; (b)
scrubs, detergents and washing preparations; (c) soft soap or
no soap; (d) adhesive
plaster; (e) surgical tapes; (f) liquid paraffin; (g) disinfectants,
and (h) cosmetics and toilet preparations. This substitution
shall be deemed to have been made from the 1st day of July,
2022" after the expression " (XXXI of 1976)", in column (2)
against serial number 81 in column (1) in Table-I in
the Eighth Schedule
Clause 5 (22) (iv) Seeks to add new serial numbers 84, 85, 86, 87, 88, 89,
90 and 91 and entries relating thereto in columns (2), (3),
(4) and (5), after serial number 83 in column (1) in Table-I
in the Eighth Schedule
Clause 5 (23) (a) Seeks to substitute Table-II of Ninth Schedule
Clause 5 (23) (b) Seeks to omit clauses (iii), (iv) and (v) under the heading
LIABILITY, PROCEDURE AND CONDITIONS
after Table-II of Ninth Schedule
Clause 5 (24) (a) Seeks to substitute the expression "80%" for the expression
75% in column (4) against serial number 7 in column
(1), in the TABLE, in the Eleventh Schedule
Clause 5 (24) (b) Seeks to add new serial numbers 9, 10, 11, 12 and 13 and
entries relating thereto in columns (2), (3) and (4) after serial
number 8 in column (1), in the TABLE, in the Eleventh
Schedule
Clause 5 (24) (c) Seeks to substitute clause (viii) after the TABLE in
the Eleventh Schedule
Clause 5 (25) Seeks to add the expression " (PCT headings 8517.1419,
8517.1430 and 8517.1390)" after the word "phones", in sub-
clause (iv), in clause (2), under the heading Procedure and
Conditions, after the Table, in the Twelfth Schedule
INCOME TAX ORDINANCE, XLIX OF 2001
Clause 6 (1) Seeks to amend the definition of the Federal Board of
Revenue to include a Member of the Board to whom powers
of the Federal Board of Revenue have been delegated
Clause 6 (2) Seeks to provide that a person acquiring shares shall collect
tax at the time of payment of consideration for shares
or at the time of registration of shares, whichever is earlier.
Clause 6 (3) Seeks to provide that loss for Pakistan International Airlines,
from 01 January 2017 can be carried forward to ten years as
against earlier availability of carry forward for six years.
Clause 6 (4) Seeks to explain that hundred percent tax credit for persons
engaged in coal mining projects in Sindh and supplying coal
to power generation projects is available only to their income
derived from coal mining operations.
Clause 6 (5) Seeks to provide the condition of filing of audited
accounts for an association of persons having turnover
of three hundred million rupees or more to file its
audited accounts otherwise the income of member of
the association of persons shall not be exempt from tax.
Clause 6 (6) Seeks to provide a new category of persons who have filed
return but not within due date
Clause 6 (7) Seeks to provide that where a person is paying royalty
for use of brand to its associate and also claiming
advertisement expense, twenty five percent of the
advertisement expense shall be allocated to the associate.
Clause 6 (8) Seeks to bar exit from Pakistan for persons who do not file
their return even after issuance of notice for filing of
return after their names have been mentioned in the
income tax general order, but this condition shall not
apply for persons proceeding on Hajj, umrah, minors,
students, overseas Pakistanis holding NICOP and such
other class of persons notified by the Board.
Clause 6 (9) Seeks to provide that assets in wealth statement includes
foreign assets
Clause 6 (10) Seeks to allow best judgment assessment for discontinued
business.
Clause 6 (11) Seeks to remove a technical anomaly regarding order to be
revised by the Commissioner.
Clause 6 (12) Seeks to provide that for filing of appeal before the
Commissioner (Appeals) in cases involving value of
assessment greater than twenty million, the term 'value' of
assessment' means net increase in tax liability as a result of
order, and that the date of transfer of cases which was 16th
June 2024 shall now be 16th September 2024 but the same
shall be deemed to have been transferred on 16th June 2024.
Clause 6 (13) Seeks to determine pecuniary limit for Commissioner
Appeals.
Clause 6 (14) Seeks to correct a technical anomaly so that appeals against
the order of the Commissioner Appeals are not filed in the
Appellate Tribunal and are directly filed in High Court.
Clause 6 (15) Seeks to provide for adoption of turnover equal to 120% of
turnover in advance tax cases where the turnover is
not known and provides for filing of certain documents
in case estimates for advance tax are filed. Non-filing
of required documents may lead to rejection of estimate.
Clause 6 (16) Seeks to provide the Board to determine minimum value in
certain cases on which income tax will be collected
on import stage.
Clause 6 (17) Seeks to change the facility of exemption certificate
to reduced rate c ertificate on s upply of goods to permanent
establishments of non-residents
Clause 6 (18) Seeks to change the facility of exemption certificate
to reduced rate certificate on supply of goods for residents
Clause 6 (19) Seeks to change the one percent tax collected on
imports from final tax to minimum tax
Clause 6 (20) Seeks to change the facility of exemption certificate against
certain withholding provisions to reduced rate certificate
Clause 6 (21) Seeks to make a technical amendment consequent to change
of tax on exports from final to minimum tax
Clause 6 (22) Seeks to make a technical amendment consequent to change
of tax on exports from final to minimum tax
Clause 6 (23) (a) Seeks to provide penalty for persons who have discontinued
their business and do not file their return in response
to notice
Clause 6 (23) (b) Seeks to provide penalty of sealing of shop traders and
shopkeepers who are required to but fail to register under the
Tajir Dost Scheme or similar schemes
Clause 6 (23) (c) Seeks to provide penalty of one hundred million rupees for
implementing agencies who fail to block sims or disconnect
utilities or allow exit from Pakistan of/for non-filers for first
default and two hundred million for subsequent default
Clause 6 (23) (d) Seeks to provide penalty of 50% of the tax involved for
persons who fail to collect tax from the acquirer of shares
at the time of payment or at the time of transfer of
shares, whichever is earlier
Clause 6 (23) (e) Seeks to provide penalty of rupees five hundred thousand or
ten percent of the tax chargeable for persons who leave the
relevant particulars of return blank or who file
blank accounts or file incomplete or irrelevant particulars
so as to understate the tax liability
Clause 6 (24) Seeks prosecution for of person fails to furnish return for
discontinued business in response to notice.
Clause 6 (25) Seeks to provide prosecution of persons who leave the
relevant particulars of return blank or who file
blank accounts or file incomplete or irrelevant particulars
so as to understate
the tax liability which upon conviction is punishable on
conviction with a fine or with imprisonment for one year or
both. Also seeks to provide prosecution for failure to get
registered for Tajar Dost scheme with punishment of
imprisonment which may extent to six months, or with
fine, or both.
Clause 6 (26) Seeks to increase the rate of default surcharge for late
payment to KIBOR + 3%
Clause 6 (27) Seeks to enable sharing of data with National Database
Registration Authority to process and analyze data for
broadening of tax base
Clause 6 (28) Seeks to include all the sectors of business for collection of
advance tax from distributors, dealers and wholesalers at the
time of sale to such persons by manufacturers or commercial
importers
Clause 6 (29) Seeks to include all the sectors of business for collection of
advance tax from retailers at the time of sale to such persons
by distributors, dealers, wholesalers, manufacturers and
commercial importers
Clause 6 (30) Seeks to provide saving for limitation in filing appeals
for cases decided by the Appellate Authorities prior to
the Tax Laws (Amendment) Act, 2024
Clause 6 (31) (A) (1) (a) Seeks to provide new rates for tax for business
individuals and associations of persons
Clause 6 (31) (A) (1) (b) Seeks to provide new rates of tax for salaried individuals
Clause 6 (31) (A) (2) Seeks to enhance tax rate on dividend received from a
mutual fund deriving 50% or more of its income from
profit on debt to 25%.
Clause 6 (31) (A) (3) Seeks to fix the tax rate for capital gain on securities to 15%
for securities acquired on or after 01 July, 2024
irrespective of the holding period for filers, and for
non-filers the tax will be
collected at normal rates with minimum rate of 15% and rate
of capital gains received from a mutual fund or collective
investment scheme or REIT scheme has been
enhanced from 10% to 15%.
Clause 6 (31) (A) (4) Seeks to fix the tax rate for capital gain on immovable
property to 15% for property acquired on or after 01
July, 2024 irrespective of the holding period for filers,
and for non-filers the tax will be collected at normal
rates with minimum rate of 15%
Clause 6 (31) (B) (1) Seeks to enhance tax rate on dividend received from a
mutual fund deriving 50% or more of its income from
profit on debt to 25%.
Clause 6 (31) (B) (2) Seeks to provide withholding tax rate for toll
manufacturing for companies and others.
Clause 6 (31) (C) (1) Seeks to enhance withholding tax rate from 15% to 75% on
use of mobile phones for persons whose names are
appearing in the income tax general order for non-filing
of return even after issuance of notice.
Clause 6 (31) (C) (2) Seeks to provide rates of collection of tax on registration of
motor vehicle in proportion to the value of the vehicle.
Clause 6 (31) (C) (3) Seeks to provide progressive withholding tax rates for
filers on sale of property ranging from 3% with value
of property does not exceed Rs.50 million, 3.5% where
the value of property exceeds 50 million but does not
exceed 100 million and 4% where the value of
property exceed 4%.
Clause 6 (31) (C) (4) Seeks to provide progressive withholding tax rates for
filers on purchase of property ranging from 3% with value
of property does not exceed Rs.50 million, 3.5% where
the value of property exceeds 50 million but does not
exceed 100 million and 4% where the value of property
exceed 4%.
Clause 6 (32) (A) (i) Seeks to withdraw exemption for income from subsidy
received from the Federal Government
Clause 6 (32) (A) (ii) Seeks to extend exemption to former FATA and
PATA region up to 30th June, 2025
Clause 6 (32) (B) Seeks to increase the reduced rate for distributors of
cigarettes from 1% to 2.5%
Clause 6 (32) (C) Seeks to withdraw tax credit to full time teachers and
researchers
Clause 6 (32) (D) Seeks to extend exemption to former FATA and
PATA region up to 30th June, 2025
Clause 6 (33) (a) Seeks to explain the existing tax regime for banks so that the
existing tax treatment may continue with no new
provisions to be allowed.
Clause 6 (33) (b) Seeks to explain a term regarding applicability of super
tax for banking companies.
Clause 6 (34) (a) Seeks to provide enhanced withholding tax rates for
non-filers on purchase of immovable property on the basis
of value of immovable property with 12% tax on
immovable property with value up to 50 million, 16%
rate for immovable property having value between 50 to
100 million and 20% for value above 100
million. Similarly, tax rates for non-filers for profit on
debt has been increased from 30% to 35%, withholding
tax rate on sale of immovable property has been increased
to 10% for non-filers. Withholding tax rates for non-filer
distributors, wholesalers or dealers has been increased to
2% and for non-filer retailers it is 2.5%
Clause 6 (34) (b) Advance tax on sale and purchase of immovable property by
persons who are late filers i.e., who do not file their return by
the due date has been provided at 6% where the value of
property is up to Rs.50 million, 7% where the value of
property is up to 100 million and 8% where the value
of property exceeds Rs.100 million.
Clause 6 (34) (c) Seeks to make a technical amendment in the 10th
Schedule to Income Tax Ordinance, 2001 as rates for
non-filers on disposal of securities has now been provided
in the first schedule to the Income Tax Ordinance, 2001.
FEDERAL EXCISE ACT, 2005
Clause 7 (1) Seeks to substitute the words "KIBOR plus three" for
the word "twelve" in section 8
Clause 7 (2) (a) (i) Seeks to omit the word "and" at the end in clause (d) of sub-
section (3) of section 19
Clause 7 (2) (a) (ii) Seeks to add the word "and" after the expression
under and thereafter seeks to add new clause (f)
after clause (e) of sub-section (3) of section 19
Clause 7 (2) (b) Seeks to insert new sub-section (10A) after sub-section
(10) in section 19
Clause 7 (3) Seeks to insert the words "of tax" after the word
assessment in sub-section (1) of section 33
Clause 7 (4) Seeks to substitute the word "June" for the
word "September" in sub-section (4) of section 33A
with effect from 16th day of June, 2024
Clause 7 (5) Seeks to insert new section 34AB after section 34A
Clause 7 (6) (i) Seeks to insert new serial number 7a and entries relating
thereto in columns (2), (3) and (4) after serial number 7 in
column (1) in Table-I of the First Schedule
Clause 7 (6) (ii) Seeks to add the words "or sixty five percent of retail price
whichever is higher" after the words "per kg" in column
(4) of serial number 8a in column (1) in Table-I of the
First Schedule
Clause 7 (6) (iii) Seeks to insert new serial number 8d and entries relating
thereto in columns (2), (3) and (4) after serial number 8c in
column (1) in Table-I of the First Schedule
Clause 7 (6) (iv) Seeks to substitute the words "twelve thousand five
hundred" for the words "nine thousand" in column
(2) against serial number 9 in column (1) in Table-I of
the First Schedule
Clause 7 (6) (v) Seeks to substitute the words "twelve thousand five
hundred" for the words "nine thousand" in column
(2) against serial number 10 in column (1) in Table-I of
the First Schedule
Clause 7 (6) (vi) Seeks to substitute the word "three" for the word "two"
in column (4) against serial number 13 in column (1)
in Table-I of the First Schedule
Clause 7 (6) (vii) Seeks to substitute the words "eighty thousand" for
the words "fifteen hundred" in column (4) against
serial number 56 in column (1) in Table-I of the
First Schedule
Clause 7 (6) (viii) Seeks to add new serial numbers 63 and 64 and entries
relating thereto in columns (2), (3) and (4) after serial
number 62 in column (1) in Table-I of the First Schedule
Clause 7 (7) Seeks to substitute the expression "Restriction-2-Brand
variants at different price points" for the expression
(2) Variants at different price points and seeks to
add Explanation in the marginal heading after the Table-1
of the First Schedule
Clause 7 (8) Seeks to add new serial number 23 and entries relating
thereto in columns (2) and (3) after serial number 22 in
column (1) in Table-I in the Third Schedule
Federal Board of Revenue Act, 2007
Clause 8 (1) Seeks to exclude an employee as a person to whom the
powers of the Federal Board of Revenue can be delegated.
===================================================================================================
The Statement of estimated Tax Expenditure of the Federal Government as
required under Section 8 of Public Finance Management Act 2019 is appended
at the end of this bill as Annex-A.
====================================================================================================
Copyright Business Recorder, 2024
ISLAMABAD: The government has allocated Rs 12.56 billion for the Ministry of National Food Security and Research (MNFS&R) in the annual budget for the fiscal year 2024-25 under the Public Sector Development Programme (PSDP), compared to Rs8.850 billion in the budget 2023-24.
The budget document showed an increase of 70.46 percent in funds allocated for various attached departments of MNFS&R. The Rs12.56 billion would be spent on the completion of 21 ongoing developmental projects and13 new schemes during the current financial year.
Under the PSDP 2024-25, Rs4,000 million has been allocated for a national programme for the improvement of watercourses phase II, while Rs1600 million earmarked for the national programme for enhancing the commend area in rain-fed (barani) areas of Pakistan.
Out of Rs12.56 billon, Rs1,000 allocated for promotion of olive cultivation on commercial scale in Pakistan Phase-II, Rs 800 earmarked for national oilseed enhancement programme and set aside Rs 700 million for professional capacity building in agriculture (TVET National Reforms Programme).
As per the budget breakdown, Rs 600 allocated for water conservation in rain-fed (barani) areas of Khyber Pakhtunkhwa, Rs 491 million for pilot shrimp farming cluster development project and Rs 300 million for promoting research for productivity enhancement in pulses.
The government has allocated Rs 287.600 for Pakistan-Korea joint programme on certified seed potato production system, earmarked Rs 276 million for establishment of seed certification laboratory at Khuzdar & Turbat and set aside Rs 200 million for promotion of trout farming in northern areas of Pakistan.
In the budget 2024-25, Rs 240 million for National Peste des Petits Ruminants (PPR) eradication programme; Phase-I risk based PPR control in Sheep and Goats of Pakistan, Rs 210 million establishment of consumer sourcing seed authenticity system & strengthening of laboratory of Federal Seed Certification and Registration Department (FSC&RD) and Rs 127 million for strengthening of FSC&RD regional laboratory and support mechanism for seed track & trace system to improve seed quality.
Copyright Business Recorder, 2024
The budget 2024-25 exercise is akin to a five-legged kangaroo - one leg manacled by the International Monetary Fund (IMF), another by an elite refusing to accept a wage or procurement freeze, the third shackled by political allies and the fourth by an increasingly restive public refusing to be appeased by doctored lower inflation and unemployment figures.
When grazing, the kangaroo’s fifth leg, the tail, is operational and is being wielded by the Pakistan Muslim League-Nawaz supremo Nawaz Sharif.
And yet bravado appeared to prevail in the Finance Minister’s speech echoing claims of stability, higher revenue, higher reserves, lower inflation, buoyant stock market and his usual harangue that the way forward is through luring foreign direct investment into the country though he emphasized the need for structural reforms pledging implementation - pledges that were made by former finance ministers while presenting the budget but never implemented.
However as new sovereign guarantees to be issued are budgeted at 403 billion rupees more than the position on 31 March 2024 one may assume that foreign investment inflows will not be extended guarantees.
Muhammad Aurengzeb emphasized that the government would engage only in essential services and not in business – a view of capitalism practiced perhaps only in the United States and redundant in the rest of the world with even European countries sporting a mixed economy with elements of socialism and capitalism.
The Finance Minister’s claim that the government will reduce wasteful expenditure was refuted as he budgeted a current expenditure rise to 17 trillion rupees – 491 billion rupees higher than projected by the IMF in its second and final review of the Stand By Arrangement and constituting a rise of 29 percent from the budgeted amount last fiscal year.
The need for rationalizing data in the current expenditure budget is acute on five items.
First, a pension rise of 122 billion rupees budgeted for next year payable to civilian and military personnel who constitute merely 7 percent of the country’s total labour force – an item funded entirely at the tax payers’ expense.
Calculation of the rise in military pensions shows 79 billion rupees - 662 billion rupees this year compared to 583 billion rupees last year - while civil pensions indicate a reduction of 8 billion rupees when compared to the revised estimates of last year.
Second, mark-up on domestic debt is budgeted to rise by 1525 billion rupees from the revised estimates of last year (in spite of a 150 basis points decline in mark-up on Monday) – 219 billion rupees higher than projected by the Fund in its last report. This is attributable to the budgeted 5142 billion rupee bank borrowings (which includes T-bills, Pakistan Investment Bonds and sukuk) - a rise of nearly 65 percent from the amount budgeted last year and a major contributor to domestic inflation.
Mark- up on foreign debt is budgeted to decline by 1.231 billion rupees which is on the back of external receipts of 5685.8 billion rupees (against 5053 billion rupees in the revised estimates of last year).
The question that was neither posed nor answered is whether the government is relying minimally on borrowing from abroad (apart from IMF’s Extended Fund Facility programme on which negotiations are ongoing) and maximally on foreign investment inflows that have been pledged but not yet disbursed.
Third, civilian administration outlay has been budgeted to rise by 11.4 percent compared to the revised estimates of last year – again an amount that is not justified given the current economic impasse.
Fourth, subsidies were raised by 27 percent with subsidy to power sector (Wapda/Pepco/Kesc) raised by a whopping 103 percent from the revised estimates of last year – from 584 billion rupees to 1190 billion rupees with the privatised KESC allocated 174 billion rupees under tariff differential subsidy – an allocation that undermines the very objective of privatization.
Other subsidies have been slashed and interest free loans to landless farmers in flood affected areas abolished, which may have angered PPP Chairman Bilawal Bhutto-Zardari.
And finally, defense outlay was budgeted to rise by 14.4 percent which can be justified based on the rise in terror attacks as well as the demand for greater security by the Chinese.
Development expenditure has been budgeted at 1400 billion rupees though it is likely that this would be slashed if required to contain the deficit at the end of the year and additionally it has been reported though not confirmed that this item constitutes the implementation of projects identified by Nawaz Sharif though it is likely that some of these funds may have to be diverted to Sindh to appease the PPP that had initially refused to attend the budget session on the grounds that they had not been consulted and which led the PPP Chairman opting not to attend the budget session.
Federal Board of Revenue (FBR) has projected a rise of 40 percent – from 9252 billion rupees in the revised estimates of the outgoing year (a shortfall of 163 billion rupees) and 1857 billion rupees higher than what was projected in the Fund report.
Petroleum levy has been budgeted at 1281 billion rupees against the 960 billion rupees collected in 2023-24 (budgeted at 868 billion rupees) though the Fund had projected 1080 billion rupees from this item next fiscal year. This budgeted rise necessitates upward revision of the levy from 60 to 80 rupees per litre in the Finance Bill – a highly inflationary indirect tax.
And Muhammad Aurengzeb’s repeated claims that PIA privatization will be completed by the first to second quarter of next year is not reflected in the budgeted privatization proceeds at 30 billion rupees.
And finally, unlike previous years the FBR in its usual post-budget interaction with media did not share precisely how much would be generated from each measure, though in a question and answer session it revealed that 1800 billion rupees would be generated from policy and enforcement measures, 2000 billion rupees from autonomous growth, personal income tax would generate an additional 100 billion rupees with property rates raised to generate an additional 125 to 130 billion rupees. So much for greater transparency.
In other words, the budgeted expenditure outlay and revenue surpass the Fund’s projections with the budgeted deficit projected at 6.9 percent against the unsustainable 7.4 percent in the outgoing year.
Primary deficit is budgeted at 2 percent against 0.4 percent in the revised estimates of the outgoing year though the Fund report projected it at 0.4 percent.
The exchange rate has been budgeted at 278 which appears to be an optimistic projection as the usual depreciation of the currency is between 3 to 4 percent per annum.
Copyright Business Recorder, 2024
KARACHI: The federal budget will continue the fiscal consolidation seen last year and most of the targets are in line with IMF guidelines which will help in getting long-term financing facility, analyst said.
Though no major reforms were seen on the exports, energy and other sectors but many tax exemptions have been removed, they added.
The government has adapted significant tax measures to get incremental tax revenues of Rs 3.7 trillion, taking total FBR taxes to Rs 12.97 trillion from current year estimated number of Rs 9.25 trillion.
Including PDL in tax revenues, the FBR tax to GDP ratio for FY25 is estimated to reach 11.5 percent from 9.62 percent in FY24E. For last five years this has remained 9.7 percent of GDP. To recall, PDL used to be a tax revenue till FY20.
“We believe, tax measures taken under this budget are quite balanced and less inflationary than expectations, as earlier it was considered that government will increase GST by 1.0 percent,” senior analyst and CEO, Topline Securities Muhammad Sohail said.
“We believe, these measures will pave the way for IMF program, if approved from the parliament,” he added.
Overall budget aims to ensure primary surplus of 2.0 percent of GDP or Rs 2.5 trillion (excluding provincial surplus 1.0 percent of GDP), which we believe is in line with the IMF guidelines, as reported in various news papers.
“We believe, GDP target of 3.6 percent is achievable as industries has started reflecting V shaped recovery; LSM index in the third quarter of FY24 has achieved growth of 1.47 percent,” he said. Approximately, 50 percent of the subsectors have recovered and posted positive growth.
“Going forward, with the expected decline in interest rates, we believe industrial growth target of 4.4 percent is achievable,” Sohail said.
“On the other hand, services sector is also expected to grow 4.1 percent and we believe, on the back of low base, expected recovery in industrial growth and subsequently in advances of the banks, the services sector is also expected to post plus 4.0 percent growth, as projected by government.”
He said actual interest expense for FY25 may remain on lower than projected numbers due to expected fall in interest rates.
Regarding FBR tax revenue, he believes the government can collect around Rs 12 trillion based on the new tax measures. The balance numbers can be achieved through reduction in significant higher PSDP allocation, he said.
The government has projected current account deficit of $3.7 billion for FY25, which will be higher than FY24 as it is expected to be a year of surplus of $100-200 million, he said.
Increase in PDL limit to Rs 80 per liter (minimum Rs 60) on HSD and MS oil will help government to collect around Rs 350 billion.
Copyright Business Recorder, 2024
Overambition is the call of the day. Concrete measures to support high taxation growth—something the country direly needs and the Budget FY2025 itself has astoundingly targeted—are entirely missing.
Aurangzeb and team did well to negotiate tough IMF conditionalities by navigating through taxation demands on agriculture, sales tax on sugar, and higher taxes on salaried individuals among other hard-hitting numbers.
At the same time, the home team conceded on immovable property taxes and higher taxes on non-salaried individuals.
The sacred cows of retailing and trading, however, were kept largely protected.
On the expenditure side, there is a generous increase in government employees’ salaries, and doubling of the federal development budget.
It seems there are deliberate efforts to protect the PML-N core constituents from new taxes while the axe falls on exporters and formalized small and medium enterprises.
Overall, it appears that the Dar-phenomenon is peeking through the budget presented by finance minister senator Aurangzeb.
The challenge would be to meet 40 percent growth budgeted in FBR revenues. The clarity in the budget is missing on how to achieve nearly 50 percent growth in direct taxes and 35 percent in sales tax. The numbers are just not adding up.
The initial proposal from the IMF had a number of new measures and higher incidences of taxes on existing base.
However, the government managed to tackle these steps. The surprising part is there is no change in the FBR target of Rs12,970 billion. Either these targets will be missed or a mini budget is in the offing over the next few months.
One area where the government stood strong is on the imposition of normal tax rate on exporters. The minimum tax on revenues would no longer remain the full and final tax.
All income should be treated equal. Exporters may have fair demands on having energy and working capital on competitive rates. Once they make sales and earn money on businesses operating in Pakistan, they should pay their fair share of taxation.
The horizontal equity demands everyone to pay due share of income tax irrespective of the kind of income they are making. The tax should be uniform and non-predatory.
That equity is missing for non-salaried persons where the government has imposed maximum slab of 45 percent on non-salaried persons. They might have doctors, lawyers, accountants and other consulting professionals in mind while imposing this tax.
But the government did not lend any thoughts on how this would affect the tax-compliant SME sector. Small business and partnerships are now liable to pay higher taxes than large companies and salaried individuals. How can the government create such an inequality in income tax?
The equity is also missing when it comes to retailer and wholesalers, agriculture and other avenues.
The only notable tax measure is to bring higher WHT on non-filers in the supply chain. The philosophy of targeting non-filers is faulty and can have an opposite effect on formalization.The objective should be to do away from it. In any case, the market may price-in this tax, and therefore, this would have inflationary consequences.
The budget is deemed to be market friendly. There was a proposal of treating capital market income as all other incomes by imposing normal income tax on them. However, the government did not impose it.
There are no additional taxes on most of the sectors listed on the stock exchange. A bull run is likely to continue.
The non-tax revenues are savior for the government which is expected to give SBP Rs2.5 trillion in profits. The second big source is petroleum levy which has increased to Rs80/liter to generate Rs1,080 billion.
These are not part of the divisible pool and would help to lower the fiscal deficit.
However, to achieve the fiscal deficit target of 6.9 percent of GDP, new measures must be taken in the FBR taxation domain and development budget to be curbed significantly.
Copyright Business Recorder, 2024
Ali Khizar is the Head of Research at Business Recorder. His Twitter handle is @AliKhizar
KARACHI: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Wednesday expressed a mixed reaction to the recently announced budget.
During a press conference in Karachi, FPCCI President Atif Ikram Sheikh commented that the reduction of the interest rate by one and a half percent would have a little impact. He pointed out the disparity in electricity costs, noting that factories in neighbouring countries pay 8 cents, while those in Pakistan pay 17 cents per unit.
Sheikh also criticised the increase in tax on real estate, suggesting it would stifle the sector.
FPCCI Vice President Saqib Maggo remarked that the budget targets are overly ambitious given the current state of industries. While he welcomed the increase in the export refinance amount, he warned that bringing exporters into the common tax net could harm exports.
He acknowledged the substantial allocation for the IT sector and appreciated the increases in salaries and pensions. He also endorsed tax digitisation but cautioned that the capital gains tax on real estate could decrease remittances from abroad.
The federal government has presented a budget of over 18 trillion rupees for the next financial year 2024-25.
The budget for 2024-25 proposes higher tax rates for filers and non-filers on property transactions. Filers will face a 15% tax on the purchase and sale of property, while non-filers will be taxed up to 45%.
Copyright Business Recorder, 2024
KARACHI: The federal budget 2024-25 has drawn sharp criticism from the business community, that termed it an ‘IMF-friendly’ and not a business-unfriendly budget.
Speaking at a press conference after the federal finance minister’s budget 2024-25 at the Karachi Chamber of Commerce and Industry (KCCI) on Wednesday, Zubair Motiwala, Chairman of the BMG Group, expressed grave concerns over the proposed 38% increase in the FBR’s revenue target to a staggering Rs. 12 trillion.
“The imposition of over Rs. 3500 billion new taxes will significantly increase industrial costs, inevitably leading to the harassment from the FBR as they struggle to meet their unrealistic collection targets,” Motiwala cautioned.
While the finance minister signalled intent to rationalise power tariffs, the absence of measures to address soaring gas prices has emerged as another source of concern for the industry, Motiwala said, bluntly labelling the budget as “trader unfriendly.”
Additionally, the business leader criticised the government’s decision to allocate Rs. 79 billion to the IT sector instead of improving the tax structure to facilitate the inflow of foreign exchange.
In a move that could potentially hamper exports, the budget has included the export sector in the normal tax regime, departing from the previous final tax regime. “Had the government supported export-oriented sectors, the export target for 2024-25 could have been surpassed with ease under governmental support,” Motiwala asserted.
The dissenting voices echoed throughout the business community, with Iftikhar Ahmad Sheikh, KCCI, declaring the budget “tough and business unfriendly.”
Former KCCI president Haroon Farooqui went a step further, branding it a “business killer budget” that serves the interests of the IMF rather than the general public.
Copyright Business Recorder, 2024
ISLAMABAD: Federal government employees on Wednesday staged a protest demonstration outside the parliament during the budget session to press the government for the fulfillment of their demands.
The government employees including lady health workers, lady teachers, and PWD employees, marched from the Pakistan Secretariat and gathered outside the Parliament House.
They demanded the government that a reasonable increase in their salaries be ensured in the budget 2024-25 being announced as the skyrocketing inflation has made it impossible for them to make both ends meet.
A heavy contingent of police deployed on the occasion as well as prison vans were stationed near the venue of the protest in order to avert any untoward incident
Rehman Bajwa, head of the Pakistan Secretariat Committee while addressing the protesters has urged the government to find a solution to the employees’ problems through negotiations.
Office-bearers of the All Government Employees Grand Alliance have asked the government to meet all demands of its employees.
They have demanded a 100 percent increase in the house rent, medical and conveyance allowances for employees.
Bajwa urged the government to ensure that all its employees receive equal pay.
Protesters also demanded that the federal government introduce a system under which its employees could also be upgraded just like is the case in provinces.
They have urged the government to make the employees working on contract and ad hoc basis permanent.
The protestors have also asked the government to fix the minimum wage of a labourer at Rs 50,000.
Copyright Business Recorder, 2024
ISLAMABAD: The government has earmarked Rs103.781 billion for Education Affairs and Services in the federal budget for 2024-25 against the revised allocation of Rs103.684 billion for the current fiscal year, showing an increase of less than one per cent (0.9 percent).
The cumulative education expenditures by federal and provincial governments declined as percentage to GDP in the fiscal year 2023 and are estimated at 1.5 per cent of GDP compared to 1.7 per cent of GDP in the previous year, which is the lowest in the region.The bulk of expenditure of Rs79.312 billion has been allo3cated for Tertiary Education Affairs and Services in budget 2024-25, which is 76.5 per cent of the total allocation under this head.
The government has earmarked Rs5.224 billion for pre-primary and primary education affairs for 2024-25 against Rs4.468 billion for 2023-24, Rs12.624 billion earmarked for Secondary Education Affairs and Services for 2024-25 against Rs10.778 billion for 2023-24, and Rs4.497 billion for administration against the revised Rs2.844 billion for 2023-24.
Copyright Business Recorder, 2024
KARACHI: Contrary to expectations of change in treatment of income from capital gain and dividends to normal tax, affecting net returns of the investors; the budget FY25 is overall positive for the market as the government has not changed treatment of CGT to normal tax, analysts said.
Alongside this, the maximum rate of 15 percent tax on CGT has also remained unchanged (though removed slab benefits on holding for more than a year on purchase after Jul 01, 2024) for tax filers and tax on dividend has also remained unchanged at 15 percent, they added.
To note, in anticipation of above measures, the market has lost 4.0 percent or 3,186 points in last 12 sessions.
The government has removed slab wise benefit on Capital Gain Tax (CGT) for holding securities for more than a year on purchase after Jul 01, 2024. However, the top slab rate is unchanged at 15 percent for tax filers, while non tax filers, rate has increased from 30 percent to 45 percent.
“We believe, this is positive for market as it was rumor in the market that, government is mulling to change the treatment of CGT from full and final tax to normal tax”, Topline Securities, in its report said. While in actual, there is no change in treatment of CGT this will remain as full and final, it added.
There is no change proposed in tax rates for dividends income for both filers and non filers. This is positive for market as there were some news reports suggesting tax on dividend income will go up. Also there were speculations about change in treatment of dividend income to normal income. Status quo on this is positive for market. There is also no change in bonus tax. This will be neutral to positive for market.
The minimum turnover tax has remained unchanged contrary to general expectations of increase in this rate. This will be positive for low margin businesses like OMCs, chemicals and steels etc.
“We believe, this budget will serve as a prior action for new IMF program,” the report said. Subject to successful passage of this budget in compliance with IMF measures, market PE will re-rate from current 3.4x to historic forward PE of 6.93x linearly in 3 years time, it added.
“That said, we believe forward PE by Jun 2025 will rise to 4.6x, taking our index target for Jun 2025 to 106,000, providing return of 46 percent. In line with this, our Index target for Dec 2024 is 87,000, providing return of 20 percent.”
Copyright Business Recorder, 2024
ISLAMABAD: Having been lashed out by the opposition forces over tending to formulate the anti-poor and excessively taxed highhanded Finance Bill 2024-25, an all-embarrassed Pakistan Muslim League-Nawaz (PML-N) finally managed to present the new federal budget on Wednesday which was greeted with a barrage of stiff resistance by the opposing gurus.
Senator Muhammad Aurangzeb, the banking pundit cum financial czar, who presented the budget, left no stone unturned to draw a flowery pictorial presentation from idealism.
However, little did the ruling PML-N know that its “better political half” Pakistan People’s Party (PPP) had other plans to flip the coin against the ruling brats, that too when the parliamentary gurus huddled up in the freezing air conditioned hall of the decision makers who were in a rush to proclaim the country’s financial landscape for the next 12 months starting from July 01, 2024, to July 01, 2025.
The budget session which was supposed to kick run at 4pm began after a painfully long delay of two hours as PPP lawmakers wanted to boycott the all-important budgetary engaging conclave.
The fissures within the ruling coalition government surfaced after the PPP accused the ruling PML-N of ignoring its inputs in the preparation of the budget and questioning if the Shehbaz Sharif-led government still values its support.
However, the PML-N managed to woo its enraged ally after hours-long negotiations, as only three lawmakers from the PPP – Khurshid Shah, Naveed Qamar and Ejaz Jakhrani – “symbolically” attended the session after a brief boycott.
PPP chairman Bilawal Bhutto-Zardari left the Parliament House without participating in the session. The trio was seen accompanying the deputy prime minister Ishaq Dar as they entered the assembly chamber.
The development is seen as a breakthrough in the government’s efforts to ensure a smooth budget session, despite the opposition’s earlier reservations about the budget-making process.
Earlier, Shazia Marri of PPP told reporters that the PPP has decided to boycott the budget meeting, as their inputs were not sought in preparation of the budget.
However, she claimed that Tuesday’s meeting between President Asif Ali Zardari and Prime Minister Shehbaz Sharif had nothing to do with the budget.
She further said the two coalition partners had decided about consultation on the Public Sector Development Programme (PSDP), which did not take place.
“We’ll also listen to the speech of the finance minister in the National Assembly session,” she added.
On the other hand, Khurshid Shah claimed that his party had not been consulted on the budget, adding, “It was decided that PSDP of the four provinces will be mutually decided”.
However, he said that the provinces were not consulted about the fund’s allocation.
He said that the government claims it had briefed the PPP, but there is a difference between a briefing and a discussion.
“Promises regarding salaries and farmers within the budget have not been fulfilled,” he claimed, adding that both the government and the party were in the same boat and both would face equal losses.
“To avoid these losses, our demands should be met,” he added.
Meanwhile, Dar headed over to the chamber of PPP’s Bilawal to convince him to withdraw his party’s boycott of the budget session.
Dar met with Bilawal to sort out any concerns of the PPP, as per sources.
“We’re united […] will give good news soon,” he said after the meeting concluded, adding that they were all working for the betterment of the country.
After a meeting with PPP Chairman Bilawal Bhutto-Zardari, Dar told reporters that the government will soon share good news with the nation.
“We’re working for the betterment of Pakistan,” Dar said, adding that “we are together for the improvement of the country.”
As the budget session started, the highly charged lawmakers belonging to PTI-backed SIC stormed the house to materialise the worst nightmare of the ruling elite with their nerve-racking sloganeering in propagation of Prisoner No 804 – the prison number allotted to Imran Khan.
They were holding placards inscribed with slogans like “Release, Imran Khan”.
Zartaj Gul, the versatile PTI MP from iconic Dera Ghazi Khan – the stronghold of the offspring of late Farooq Leghari – had also donned especially designed attire with heart-wrenching inscriptions of “absolutely not” – an obvious yet astounding resounding reference to the daring “NO” of loud-faced Prisoner No 804 to the powerfully crushing Americans right on the re-faced embarrassing mouths.
Copyright Business Recorder, 2024
ISLAMABAD: The Opposition Leader in the National Assembly, Omar Ayub Khan, on Wednesday, expressed strong disapproval of the newly presented federal budget for the fiscal year 2024-25, terming it “meaningless” and “a violation of constitutional norms”.
Speaking at a presser, he voiced his concerns regarding the budget’s legitimacy and content.
He pointed out procedural issues, stating, “Neither a CD was provided nor was the budget written in English, which is a first in this parliament.” He emphasised that the finance minister’s speech lacked transparency and failed to present accurate records.
Rejecting the budget entirely, he said it was a “fake budget by a fake government,” arguing that it did not reflect the country’s true growth rate.
He highlighted the plight of Punjab farmers, mentioning that their wheat crops were burning while the government remained unresponsive.
Ayub also criticised the industrial growth claims made by the government.
“They say that the production of the industry has increased, but where is this production?” he questioned. He further noted that electricity prices had surged by Rs3.50 per unit recently, adding to the public’s financial burden.
He accused the government of lacking consultation and transparency.
He also accused Interior Minister Mohsin Naqvi of intentionally not submitting his tax returns, and the inaction of the government against him. He also criticised the government’s handling of trade with Iran, suggesting that rice would be smuggled out of the country.
He concluded by accusing the PPP of betrayal and questioned the overall governance and administrative decisions of the current regime.
He accused the government of dancing to the tune of the International Monetary Fund (IMF), saying the ruling party had nothing to do with giving relief to the masses as it only wanted to please its masters and the IMF.
Ayub, who is also PTI secretary general, termed the federal budget as anti-people, IMF-dictated, and anti-economy. He criticised the government for not taking the opposition parties on board in preparation of the budget, saying consultation in decision-making processes specially the budget making was a must in order to give relief to the masses. “Let me make it crystal clear, for the first time in parliament, there has been a constitutional violation in the presentation of the budget,” he added.
“I have presented four budgets in this house,” he said adding that documents of the Finance Ministry with Article 73, pink books, and economic survey had to be read there.
He further said that Finance Minister Aurangzeb Khan did not mention the deficit in the budget and termed it a fake budget.
He lamented that the government formed on Forms 47 was playing its role in converting the country into a banana republic.
He claimed that credit went to the PTI government for reducing load shedding in Pakistan by 80 per cent during its tenure.
Omar also raised concerns about the potential smuggling of rice to Iran in exchange for oil smuggling and accused the PPP of betrayal.
He expressed skepticism over reported industrial growth and production increases, citing recent hikes in electricity rates.
He challenged the federal finance minister’s claim, asking which type of industrial production was mentioned in the budget speech.
Copyright Business Recorder, 2024
KARACHI: Pakistan Business Forum (PBF) says despite the fragile economic position of the country the business community were expecting some relief for the industry, but unfortunately no concrete measure were proposed in the budget speech before National Assembly by the finance minister.
PBF President Khawaja Mehboob ur Rehman said new taxes are slapped in the shape of capital gain tax on real estate and on securities. It will further decline the real estate as one of the major job creation industry in Pakistan.
He said allocation of mark-up and risk sharing scheme for farm mechanisation of Rs 5 billion is too little. It must be revised. However allocation of Rs 206 billion for cleaning of water, climate change and food security is a welcome step. Similarly 79 billion rupees allocation for IT sector was also welcome.
PBF also welcomes the export refinancing scheme allocation from Rs3.8 billion to Rs13.8 billion. It also welcomes to remove the sales tax exemption on FATA/ PATA industries in order to provide equal opportunities for other industrial areas of the country. Mehboob further said we expected that in the today budget speech that government may announce special measure to support export-led growth, including access of credit regime but at that point speech of finance minister was silent. Also mostly things were hidden in the speech, he said.
Copyright Business Recorder, 2024
ISLAMABAD: The government has earmarked Rs 27 billion for the Ministry of National Health Services and Regulations, revealed the Budget in Brief 2024-25.
According to the document, in 2023-24 the government initially earmarked Rs 13.1 billion for the health sector which was revised down to Rs 13.09 billion. The allocation in budget 2024-25 is a twofold increase over the revised health budget 2023-24.
Copyright Business Recorder, 2024
KARACHI: The federal government has announced to provide a financing of Rs 539 billion to the exporters through State Bank of Pakistan (SBP) to facilitate the export sector.
According to the budget announcement for the next fiscal year (FY25), in order to support the export sector, the federal government has enhanced the allocation of the Export Refinance Scheme (ERS) through EXIM bank.
The Finance Minister, Muhammad Aurangzeb, in his budget speech announced to enhance the allocation from Rs 3.5 billion to Rs 13.8 billion for the export refinance scheme.
The federal government believed that with this move the portfolio of export refinance will increase Rs 100 billion to Rs 280 billion.
The government will also provide financing of Rs 539 billion to the export sector through the State Bank of Pakistan to support the exporters. The government has also decided to focus on the SME sector, and has asked banks to provide at least 20 percent financing to this sector.
Under the SMEs Strategy, the government has planned to increase credit to SMEs up to Rs 1.1 trillion from Rs 540 billion and initially Rs 100 billion will be increased during the next fiscal year (FY25). Government believes that these steps will give a lifeline to the export sector of the country.
The government has assured to make payments under the drawback of local taxes and levy (DLTL) phase wise. The government is also considering announcing a Risk Sharing Scheme for the export sector to help them in a difficult situation,
In addition, the government has also included a number of project in the Public Sector Development Program (PSDP) in order to support the exports, increase the production capacity of the export oriented industries, to enhance the competitiveness, promote digital infrastructure, innovation driven enterprises, for the promotion of Agro Industry, seed development, blue economy, research and development and other innovative reforms.
Copyright Business Recorder, 2024
ISLAMABAD: The government has curtailed the scope of the Export Facilitation Scheme (EFC) of exporters under the Finance Bill 2024.
The Finance Bill 2024 proposed the elimination of the zero rating on local supplies under the Export Facilitation Scheme (EFS).
According to Arshad Shehzad-a tax expert, the provision for local supplies of commodities, raw materials, components, parts, and plant and machinery to registered exporters authorized under the Export Facilitation Scheme, 2021, as notified by the board, is proposed to be removed.
Shehzad highlighted that zero-rating supplies under the Export Facilitation Scheme constitute a significant relief for the export sector, as exporters are progressively transitioning to the EFS scheme to obtain duty- and tax-free purchases for export purposes.
Shehzad believed that the proposal to omit this provision may significantly impact exporters who are already contending with the challenges of a demanding operational environment. The elimination of the zero-rate facility under the EFS scheme has provided much-needed cash flow support and relief for exporters. Consequently, the withdrawal of this facility is likely to detrimentally affect the export industry, requiring exporters to initially pay taxes on local procurements and subsequently seek refunds.
Copyright Business Recorder, 2024
PESHAWAR: President, Sarhad Chamber of Commerce and Industry Fuad Ishaq said the government has attempted to present a progressive budget for fiscal year 2025-25 but the business community was expecting a revolutionary budget which was unseen.
Speaking at a news conference after the presentation of the federal budget by Minister for Finance Senator Muhammad Aurangzeb at the floor of the national assembly on Wednesday, Fuad called for a review on the budget proposals, and to make them business-friendly in consultation with businessmen and stakeholders. SCCI proposals were not incorporated, he said. However, he added, some proposals presented in the budget were appreciated by the chamber and business community.
Fuad said the tax-collection target has been set for the next fiscal year, and would be difficult to achieve. He said tax-proposals presented in the budget would be proven hurdle in progressive economy and Pakistan.
He emphasized it is essential to make a reduction in the ratio of taxes, particularly to bring down sales tax to one percent of the total turnover. He said the increase in tax ratio would increase undocumented transactions, which would be detrimental for the country's economy.
During the presser, the SCCI senior vice president Sanaullah Khan, vice president Ejaz Khan Afridi, former senior vice presidents Ziaul Haq Sarhadi, Imran Khan Mohmand, executive members Affaf Ali Khan, Pervez Khan Khattak, Hamza Ibrahim Butt, Qurat Ul Ain, Saddar Gul, Faiz Rasool, Ihsanullah Mohmand, Fazal e Wahid, Hamayun Khan, Aftab Iqbal, Ihsanullah, trader leaders and member of the business community present.
Fuad expressed hope that CPEC-II would increase investment in the country and provide maximum employment opportunities for establishment of new industries. The chamber president welcomed the introduction of Tajir Dost Scheme, however, he asserted this scheme should be passed by parliament for the next 20 years and must give sovereign guarantee to traders that no new tax will be imposed after this scheme.
Fuad called the IPPs a cancer for the economy and country and demanded to immediately get rid the nation from it. He said PESCO and SNGPL should be handed over to the army as these institutions cannot be fixed without the army.
To a question, Fuad said SCCI has given proposals for reduction in tax ratio to signal digit, relief and duty-free import of machinery and other business-industry friendly recommendations but these were not incorporated in the budget. He said there is nothing special for Khyber Pakhtunkhwa, FATA and PATA, except some funds allocations.
The chamber president called for deregulating the economy and initiatives for uplift of the agriculture sector. He welcomed the launch of a free-lunch scheme for schools in the federal capital.
To another question, Fuad replied that lost-making national institutions should be privatized.
Copyright Business Recorder, 2024
KARACHI: The federal government has proposed to allocate Rs 86.9 billion for the reimbursement of TT charges to banks aimed at promoting home remittances through formal channels.
Federal Minister Finance Muhammad Aurangzeb, in his budget speech said that overseas Pakistanis are the backbone of the country and workers’ remittances have an important role in the economic growth, therefore the federal government has decided to launch some new initiatives for the overseas Pakistanis.
As a part of these initiatives, Rs 86.9 billion has been allocated for the reimbursement of TT charges on the home remittances to facilitate the overseas Pakistanis. This amount will be reimbursed against the TT charges of different home remittances schemes like ‘Sohni Dharti’.
The federal government has also decided to set up a “Center of Excellence” to train the workforce as per international requirements.
The government has also announced to digitize the emigration landscape aimed to ease the immigration procedure for the overseas Pakistanis and reduce the cost.
In order to timely address the complaints of the overseas Pakistanis, the federal government has decided to introduce a Complaint Resolution system and an international call center will be set up.
To settle the new immigrants aboard, the government is also working to provide them financing.
Government is also going to launch “Mohsin-e-Pakistan” Award for the overseas Pakistanis to honor their services for the country.
Minister Finance said that these initiatives show the government’s will to facilitate the overseas Pakistanis and appreciate their services for the country.
Copyright Business Recorder, 2024
KARACHI: Tough measures have been adopted in the federal budget 2024-25, and it is not at all a ‘people-friendly’ budget, said Ateeq ur Rehman, and economic and financial analyst.
He said the budget should have provided protection to the salaried class (the biggest contributor in the tax net); however, no relief has been given to them by reducing the imposed tax slabs. Tax is deducted at source on gross income and no expense is allowed in the computation of taxable income; rather it has been maintained at maximum, which is exorbitant, said Ateeq.
Copyright Business Recorder, 2024
ISLAMABAD: The government has announced a set of new revenue measures for the budget 2024-25, with a special focus on strict enforcement including imprisonment for traders, who would fail to register with the Tajir Dost Scheme.
As per new Finance Bill 2024, the penalty of sealing of shop is being proposed for traders and shopkeepers who fail to register under a scheme such as Tajir Dost Scheme. Further, failure to register by a shopkeeper or trader is proposed to be made an offence punishable on conviction with imprisonment for six months or with fine, or both.
The changes made through Finance Bill 2024 are in line with the new enforcement and administrative measures. However, the government has also proposed to increase the tax burden on personal incomes, particularly for the salaried class.
A tax expert explained that the exemption limit of salaried class has remained unchanged for the past three years. In the past two years, the tax rate in the first two slabs has also remained unchanged. However, the government has proposed drastic changes that directly impact salaried individuals.
Under the Finance Bill 2024, the tax rate for salaried individuals earning monthly salaries between Rs50,000 to Rs100,000 has been raised. The proposed increase would see the tax incidence go up from 2.5 percent to 5 percent. This significant rise in tax liability will impact employees who fall into this category.
The individuals earning a monthly income between Rs100,000 to Rs200,000 will be significantly impacted by the tax changes. The tax rate for this category has been increased to 15 percent from 12.2 percent, and a fixed amount of Rs30,000 has been raised from Rs15,000.
In case of individuals earning between Rs200,000 to Rs366,000 per month, the tax rate has been raised from 22.5 percent to 25 percent. Additionally, the fixed tax amount has been increased from Rs165,000 to Rs180,000. In case the monthly income range of Rs266,000 to Rs342,000 now falls under a higher tax rate of 30 percent, up from the previous rate of 27.5 percent. Furthermore, the fixed tax rate has also been raised to Rs430,000 from Rs300,000. The income limit of the upper two slabs has been reduced, which will increase the tax liability for the salaried class with low income. As a result, this category is widened to bring more salaried individuals under it. The tax rate of 35 percent will now be applied to a monthly salary of Rs342,000, which was previously for Rs1 million per month. On the other hand, the salaried class will see a reduction of Rs395,000 in the fixed amount falling under this top category.
Moreover, there are changes proposed in the taxable slabs for non-salaried individuals, with tax rates increasing progressively from 15 percent to 45 percent.
Copyright Business Recorder, 2024
KARACHI: Pakistan Business Council (PBC) here Wednesday said that expecting a single year’s budget to cure all the deep-rooted economic ills is unrealistic. This year, another challenge is to win PPP’s support and meet IMF’s conditions.
Nevertheless, the expectation was for a budget to contain inflation, revive investment, and level the playing field with the informal sector, thus generating higher taxable profits and tax revenue.
Also, as exports are the only sustainable way to balance the external account, exports and exporters were expected to be encouraged. However, the budget proposals failed to live up to these expectations though there are some positives.
First, the positives: Phasing out the concessional fiscal regime for FATA and PATA, which was being misused to undermine manufacturing in the rest of the country, is a good step. So is raising the penalties for non-filers through higher withholding and advance taxes.
However, the 2.25% advance tax on wholesalers and retailers will only affect the supplies by tax-registered manufacturers and eventually lead to higher prices, making their products less competitive vs. those of non-tax registered manufacturers and smuggled products.
An increase in the top tax rate to 45% for non-salaried individuals should encourage corporatization. However, it would also provide an added incentive for evasion.
Now, the negatives: The 20-25% salary increase across federal and (eventually) provincial government employees will cost an estimated Rs. 1.5 trillion. It will also set expectations for the private sector to emulate. A lower increase would have made sense if accompanied by a cut in headcount, especially as digitalisation and modernisation of regulations are planned.
Reducing the level at which the 35% top tax rate is levied on salaries will only accelerate the brain drain of good talent from the country. There is also no proposal to arrest the flight of capital of high-net-worth Pakistanis relocating abroad due to the CVT and some surrendering their nationality. This is at a time when the country is looking to attract FDI.
Neither is there any proposal to make investment more attractive by bringing the corporate tax rate in line with other Asian countries. With a Super Tax of up to 10% and double taxation of inter-corporate dividends, the effective tax rate for shareholders in a holding company can amount to over 50%.
The withdrawal of the holding period for the levy of Capital Gains Tax will be detrimental to the capital market, which was just seeing the revival of foreign portfolio investment. There is also a proposal to disallow 25% of sales promotion and advertising costs if royalties and technical fees are paid to an associated company. This will mainly affect foreign companies.
The Fixed Tax Regime (FTR) under which exports were liable to 1% tax on turnover will be withdrawn and replaced by normal taxation at 29% of taxable profit. In exchange, the government promises prompt sales tax refunds, competitive energy, and other facilities. Surely, they need to provide these, irrespective of the fiscal regime but have failed to do so.
The FTR scheme has been in vogue for decades. It provides the government with a very transparent way to tax export proceeds.
Under the scheme, exporters were not required to file tax returns and could avoid harassment by tax officers. Revising the FTR rate would have made more sense instead of subjecting exporters to harassment. The budget proposals need to be reconsidered.
Copyright Business Recorder, 2024
ISLAMABAD: The federal government on Wednesday budgeted Rs2,128.8 billion for defence affairs and services for 2024-25 as compared to the revised disbursement of Rs 1,859.3 billion reflecting an increase of 17.6 percent from the original budget of Rs 1,809.5 billion (14.5 percent from the revised budget).
This new budget constitutes 11.28 percent of the total budget, addressing high inflation rates and security concerns, according to defence sources.
A detailed examination of the budget indicates that the original allocation for the outgoing fiscal year was Rs 1,809.5 billion, which was later revised upwards to Rs 1,859.3 billion.
IMF projects FY25 defence budget at Rs2.152trn
Defence budget excludes pensions, which have been budgeted at Rs 662 billion. This figure represents a 13.6 percent increase from last year’s revised pension expenditure of Rs 583 billion. The pensions were originally budgeted at Rs 563 billion, reflecting a 17.6 percent increase.
Additionally, major defence-related procurements and strategic programmes, including the nuclear weapons programme, are not itemised in the budget.
For defence administration, Rs 6,781 million has been allocated, up from Rs5,312 million in the revised estimates of the outgoing year. The previous budget for 2023-24 had allocated Rs 5,467 million for this purpose.
Defence services are budgeted at Rs2,122 billion against Rs1,854 billion in the revised estimates of last year against the budgeted Rs1,804 billion rupees. This includes (i) employee-related expenses at Rs815.2 billion including salaries and allowances paid to troops in uniform and civilian employees; (ii) operating expenses budgeted at Rs513.3 billion that include transport, POL (petroleum, oil and lubricants), rations, medical treatment, training, etc; (iii) Rs548.6 billion for physical assets utilised for local purchases and import of arms and ammunition and related procurements; and (iv) Rs244.9 billion budgeted for civil works that include funds marked for maintenance of existing infrastructure and construction of new buildings.
In addition, Rs5,636 million has been allocated under the head of PSDP to the defence division and Rs3,776million to the defence production division.
The International Monetary Fund (IMF), in its second and final review documents of the Stand-By Arrangement, projected Pakistan’s defence budget for the next fiscal year at Rs 2,152 billion, indicating a 19.29 percent increase over the Rs 1,804 billion budgeted for the outgoing fiscal year.
Copyright Business Recorder, 2024
ISLAMABAD: The government has budgeted no amount from the International Monetary Fund (IMF) loans for budgetary support for next fiscal year, 2024-25, against Rs 696 billion budgeted for the current fiscal year, which was later revised to zero.
A total of Rs 5.906 trillion is budgeted from external resources for 2024-25 compared to the revised estimates of 5.035 trillion rupees in the outgoing fiscal year – a rise of 17 percent and almost 18 percent lower than the budgeted Rs7.169 trillion for the outgoing fiscal year.
This includes Rs1.144 trillion borrowing from commercial banks abroad against Rs1.305 trillion for 2023-24 which was later revised to Rs 285 billion. However, as per Economic Affairs Division (EAD) data, no money was received under this head till end April.
Pakistan’s budget on Wednesday will aim to set stage for IMF bailout, say analysts
The government has budgeted Rs 323.266 billion under project loans for 2024-25 compared to Rs 68.311 billion for 2023-24 which was later revised to Rs290.644 billion.
Under the head of programme loans the government has budgeted an external assistance of Rs 277.890 billion for 2024-25 compared to Rs 788.170 billion for 2023-24, which was later revised downward to Rs 373.457 billion.
The government has budgeted no assistance under the head of Saudi Arabia (oil facility) for next fiscal year. Further no amount has been budgeted from Saudi Arabia (Time Deposit) for 2024-25 compared to Rs870 billion for 2023-24 which was later revised to Rs 570 billion.
Further, no amount has been budgeted from Saudi Arabia (import of petrol) compared to Rs 174 billion budgeted for 2023-24 which was later revised to Rs 171 billion.
However Rs 1.475 trillion has been budgeted from KSA time deposit against Rs 580 billion for 2023-24 which was later revised to Rs 1.425 trillion. Further the government has budgeted no amount under the head of new deposit UAE for 2024-25 compared to Rs 290 billion for 2023-24 which was later revised to zero.
The government has budgeted Rs 1.180 trillion from Safe deposit for 2024-25 against Rs1.160 trillion for 2023-24 which was revised to Rs 1.140 trillion.
The government has budgeted Rs 295 billion from Euro bond for 2024-25 against Rs 435 billion for 2023-24 which was later revised to zero. Further Rs 137.145 billion has been budgeted from Naya Pakistan Certificate for 2024-25 against zero for 2023-24 which was later revised to Rs 134.235 billion.
Copyright Business Recorder, 2024
ISLAMABAD: Finance Minister Muhammad Aurangzeb, Wednesday, moved a copy of the Finance Bill 2024 in Senate, which received an outright rejection from the opposition for ‘imposing excessive taxes on the common man’.
In the brief Senate sitting, the finance minister laid a copy of the new federal budget in accordance with the relevant constitutional provisions, following which, Chairman Senate Yousaf Raza Gilani directed the senators to share their recommendations, if any, on the Finance Bill 2024 latest by this Friday noon.
The chairman then referred the finance bill’s draft to the Senate’s finance panel with the direction to finalise its recommendations on the bill by Friday, June 21, and submit the related report to the house by June 22.
Major changes in tax laws expected through Finance Bill 2024
Taking the floor, Leader of the Opposition in Senate Shibli Faraz criticised the budget for imposing heavy taxes on the common man.
In response, Leader of the House in Senate Ishaq Dar referred to increase in salaries of government employees and pensions of retired government employees in the new federal budget, claiming these steps were part of government’s policy to give relief to the masses.
The chairman Senate announced that the house would start debate on the new federal budget from today (Thursday) and adjourned the session.
The upper house of the parliament can hold extensive debate on the finance bill and devise recommendations accordingly, but it has no significant role in budgetary legislation, since it is completely up to National Assembly to either completely or partially accept those recommendations or reject them, partially or completely.
Article 73 of the constitution, which deals with parliamentary business with respect to money bills, reads a money bill shall “originate in the National Assembly: Provided that simultaneously when a money bill, including the finance bill containing the annual budget statement, is presented in the National Assembly, a copy thereof shall be transmitted to the Senate which may, within 14 days, make recommendations thereon to the National Assembly.”
Copyright Business Recorder, 2024
ISLAMABAD: The government has earmarked a sum of Rs4.37 billion for Interior Division for fiscal year 2024-25 under Public Sector Development Programme (PSDP), against Rs9.09 billion in fiscal year 2023-24.
The budget document showed a decrease of 48.07 percent in funds allocated for various attached departments of the Interior Ministry, including Federal Investigation Agency (FIA), Islamabad police, Immigration and Passport (I&P), Frontier Constabulary (FC), Pakistan Coast Guards and Pakistan Rangers, and Islamabad Capital Territory (ICT) Administration.
According to budgetary documents released on Friday, the Interior Division would execute four new and 17 ongoing projects during next financial year 2024-25.
Budgeted allocation for PSDP projects: Planning ministry authorises Rs507.98bn
Out of Rs 4.37 billon, Rs 800 million are allocated for National Police Hospital, Rs 600 million for construction of a Model Prison at Sector H-16 Islamabad and Rs 500 for Islamabad development package.
The government has allocated Rs 400 million fore construction of 10th Avenue, Rs 285 million for establishment of change management unit within Islamabad Capital Territory (ICT) Police Islamabad and Rs277.280mn for construction of a Wing Headquarters at Ahmedwam, South Waziristan district.
As per the budget breakdown, Rs 237.280 million has been allocated for construction of a Wing headquarters at Gomalzam, South Waziristan district, Rs 142.217 million has been earmarked for acquisition of land for construction of National Counter Terrorism Authority (NCTA) headquarters, Mauve Area G-11 besides setting asides another Rs 114.723 million for up-gradation of 163 RPOs and 49 Pakistan Foreign Missions abroad.
The government has allocated Rs150 million for Integrated Border Management System (IBMS Phase-II) and earmarked another Rs150 million up-gradation of Biometric Identification System (BSI) for passport application. Immigration and Passport (I&P), headquarters Islamabad. Another Rs 108 million are earmarked for construction of buildings for 13 regional passport offices in Sindh Province and Rs 109 million tagged for foreign national security and allied facilities.
In the budget 2024-25, Rs 100 million are allotted for operation management & maintenance of Metro Bus to New Islamabad International Airport (NIIA) and Rs100 for revamping of Cyber Crime Wing (CCW) of Federal Investigation Agency (FIA).
Out of the total budget allocated for Interior Division, Rs 65 million are tagged for construction of office and troops accommodation of quarter guards at FC Headquarters Peshawar and Rs 50 million for construction of additional family suits for the members of parliament including 500 servant quarters at G-5/2, Islamabad.
Copyright Business Recorder, 2024
ISLAMABAD: The federal government has proposed an increase in petroleum levy to Rs 80 per litre on petrol and diesel (HSD) in the Finance Bill, as opposed to the current maximum limit of Rs 60 per litre, to generate Rs 1,281 billion for the next fiscal year 2024-25.
This amount is Rs 201 billion higher than what was projected for next year under this head by the International Monetary Fund in its second and final review under the Stand-By Arrangement (SBA) dated May 2024.
The government has proposed a raise in the petroleum levy (PL) rate on other petroleum products like high octane blending component (HOBC), Light Diesel Oil (LDO), and E-10 Gasoline from Rs 50 to Rs 75 per litre. However, the PL rate for superior kerosene oil (SKO), widely used for cooking purposes, remains at Rs 50 per litre.
Economic Survey: Jul-Mar POL import bill down on lower intake
While the originally budgeted PL for the outgoing year was Rs 869 billion, the budgeted amount for next year represents an increase of 47.4 percent.
The PL revenue has been given a high priority by successive federal governments as it is not part of the Federal Divisible Pool (FDP) that has to be shared with the provinces as per the National Finance Commission (NFC) formula.
The government has also proposed to maintain the Gas Infrastructure Development Cess (GIDC) collection at Rs 2.5 billion for the fiscal year 2024-25, identical to the revised target set for the current financial year. The GIDC was originally budgeted at a much higher amount of Rs 40 billion for the current fiscal.
In June 2020, the Supreme Court of Pakistan ruled that various sectors of the economy must clear outstanding Rs 407 billion GIDC in 60 months but the government has yet to realize this amount due to stay orders obtained by various companies.
Natural Gas Development Surcharge (GDS) - the difference between prescribed and sale price of gas that goes to provinces - is projected to bring Rs 25.618 billion next year against budgeted Rs 40 billion and revised Rs 27.169 billion in the current year.
On the directives of Finance Ministry, Auditor General of Pakistan (AGP) is auditing the GDS claims of both gas Companies-Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company (SSGC) to ascertain the real collection.
The government has also envisaged to collect Rs 3.537 billion for the PL on Liquefied Petroleum Gas (LPG) in fiscal year 2024-25. This is compared to the revised target of Rs 3.516 billion for the current fiscal year. The original budget for the PL on LPG in the current fiscal year was significantly higher, at Rs 12 billion.
The budget for fiscal year 2024-25 envisaged Rs 25 billion to be retained as a discount on local crude oil prices. This is the same amount as the revised estimate for the current fiscal year (2023-24). The original budget for the current year was lower, at Rs 20 billion.
The budget for next year also proposes a decrease in royalty on crude oil and increase in royalty on natural gas for provinces. The budgeted amount for royalty on crude oil is set at Rs 58.654 billion for next financial year against the revised estimates of Rs 57.017 billion for the outgoing year. The government has budgeted Rs 103.751 billion in royalty on natural gas in the next financial year against a revised target of Rs 93.567 billion and budgeted Rs 75 billion in 2023-24.
The next year’s budget envisages Rs 28 billion on account of windfall levy on crude oil against budgeted amount of Rs 20 billion for the current financial year 2023-24. Windfall levy on gas has been budgeted at Rs 400 million which was Rs 220 million in current fiscal year.
Miscellaneous receipts of oil and gas companies are budgeted to generate Rs1528.46 billion in next financial year against a revised target of Rs 1197.8 billion and budgeted estimates of Rs 1141 billion in the outgoing financial year.
Copyright Business Recorder, 2024
