Finance Minister Ishaq Dar unveils Federal Budget for FY2023-2024, focusing on fiscal responsibility and economic growth. The budget includes various measures aimed at providing relief to the people and promoting key sectors of the economy.
Growth Rate of Pakistan
In his budget speech, Minister Dar emphasized that the upcoming fiscal year’s budget was not designed as an election year budget, highlighting its focus on financial prudence. He confidently stated that independent analysts would agree with this assessment. The main objective of the budget is to achieve a targeted GDP growth rate of 3.5%.
The government is actively engaged in efforts to convince the International Monetary Fund (IMF) to release a portion of the remaining $2.5 billion from a $6.5 billion program that Pakistan entered into in 2019. The program is set to expire at the end of this month, and the government is hopeful that the IMF will agree to unlock the funds.
To provide maximum relief to the people, the finance minister assured that no new taxes would be imposed next year. However, he did announce a 10% tax on listed and unlisted companies issuing bonus shares. This measure aims to generate revenue while minimizing the burden on ordinary citizens.
The total budget of 2023-24
Ishaq Dar unveils federal budget for FY2023-24 allocates Rs2,709 billion to the Public Sector Development Programme (PSDP) for federal and provincial governments. Emphasizing the government’s commitment to infrastructure development and social welfare projects. Additionally, Rs1,804 billion has been allocated for the defense budget.
In a bid to promote renewable energy and encourage investment, the government has removed customs duties on raw materials for batteries, solar panels, and inverters. Moreover, a significant allocation of Rs450 billion has been made under the Benazir Income Support Programme (BISP) for the fiscal year 2023-2024, demonstrating the government’s commitment to social welfare.
The budget also includes provisions to support the information technology sector. IT and IT-enabled service providers will be able to spend 1% of their export proceeds on importing software and hardware without incurring any duties, up to $50,000 per annum. Additionally, the government has granted IT the status of small and medium enterprises (SMEs), resulting in reduced tax obligations. Sales tax for IT services has been reduced from 15% to 5%.
Big increment in Salaries and Pensions:
One of the key highlights of the budget is the significant increase in salaries and pensions for government employees. Grades 1 to 16 will witness a 35% hike in their salaries as an ad-hoc allowance, while Grades 17 and above will receive a 30% raise. The federal cabinet has already approved this decision. The increase in pensions by 17.5% will provide much-needed relief to retirees amidst rising inflation. The minimum amount of pension has been raised from Rs. 10,000 to Rs. 12,000, benefiting pensioners across the board.
Furthermore, the budget proposes a 0% tax on parts of solar PV module panel manufacturing, machinery, and equipment, aiming to promote the growth of the renewable energy sector.
Withholding Tax on International Credit Cards:
However, the budget does include some adjustments in taxes. The Withholding Tax (WHT) on international credit card transactions will increase from 1% to 5%. While the WHT on non-ATL transactions will rise from 2% to 10%.
97.098 Billion for Education Sector:
Ishaq Dar unveils federal budget for FY2023-24 In the education sector, the budget allocates Rs. 97.098 billion for Education Affairs and Services, representing a 5.5% increase compared to the previous fiscal year. This allocation reflects the government’s commitment to improving the education system and promoting quality education nationwide.
Big Tax Relief for Freelancers and IT Sector:
While the budget does not specifically address the tech or telecom sectors, it brings good news for freelancers and gadget enthusiasts. Moreover, the budget includes an increased allocation of Rs. 72.597 billion from 4G licenses under non-tax revenue for the next fiscal year, signaling the government’s focus on expanding connectivity and digital infrastructure.