Minister claims to have presented pro people and business friendly budget

Minister claims to have presented pro people and business friendly budget.

Minister for Finance Shaukat Tarin said the budget focuses on Prime Minister Imran Khan’s vision of a strong and sustainable growth driven Kamyab Pakistan.

He presented Rs8487bn federal fiscal budget for 2021-21. Moreover, he claims he presents a pro-people, business friendly and growth oriented federal budget for fiscal year 2021-22.

Minister claims to have presented pro people and business friendly budget

Tarin stated this, while presenting the budgetary proposals for the next fiscal year in the National Assembly on Friday.

He further said the budget mainly aims to strike a balance between fiscal deficits due to COVID-19 and boosting growth of economy. Besides, it aims to keeping a primary balance at a sustainable level.

He said the gross revenues for the next fiscal year estimated at Rs 7909 billion compared to revised estimate of Rs6395 billion for the outgoing fiscal year.

This shows a handsome growth of 24 percent in gross revenues.

The Minister further said the FBR revenues projected to grow by 24 percent from Rs4691 billion to Rs5829 billion.

Non-tax revenues projected to grow by 22 percent.

Provincial share in federal taxes

Shaukat Tarin said the provincial share in federal taxes would increase from 2704 billion rupees last year to 3411 billion rupees.

This means an additional 707 billion rupees or 25 percent increase. He said this should enable the provinces to spend resources on development and critical social sectors. Those sectors include: health, education, population welfare, youth, women development, sports and labour welfare.

After provincial transfers, the net federal revenues estimated at 4497 billion rupees. It estimated as compared to 3691 billion rupees under the revised estimate for last year.

This shows a growth of about 22 percent. The overall deficit for 2021-22 estimated at 6.3 percent as opposed to the revised estimate of 7.1 percent for current fiscal year.

Primary deficit target remains at 0.7 percent. Despite COVID-19, the government has continued on the path of reduction of primary deficit. That he underlined as a great achievement.

Shaukat Tarin said of increasing the federal development spending from Rs630 billion to Rs900 billion. He noted it an increase of around 40 percent.

He underscored it as imperative that government expenditures minimized and their utility ensured. Therefore, he said, we will continue to be austere throughout the government.

He said subsidies are projected at 682 billion rupees up from 430 billion rupees. These mostly comprise due payments of Independent Power Producers, tariff differential subsidies and concessions on food.

POVERTY ALLEVIATION

The Finance Minister said Prime Minister Imran Khan wants to change the course of the history by uplifting four to six million low income households through bottom-up approach from next year.

He said every household will be provided 500,000 rupees interest free business loans.

Every farming household will be given 2050,000 rupees interest free farming loan and 200,000 rupees for tractors and machineries.

These families will be provided with low interest housing loans up to two million rupees so that they can build their houses.

Every household shall be provided with a Sehat Card and one percent from every household will be provided free technical training.

Through this action we are giving a comprehensive package to the low-income group people; slogan of which was raised by many leaders in the past but nothing was delivered.

He said this is an essential requirement of Imran Khan’s promise of Riasat-e-Madina.

The Finance Minister said the major initiative of the government for social protection and poverty alleviation is the Ehsaas Programme.

For this program, 260 billion rupees are being proposed in the next budget, which is by far the largest allocation and reflects the vision of the Prime Minister to help the extreme poor segments of the society.

EMPLOYEES

The Finance Minister announced the grant of 10 percent ad hoc relief allowance for all the federal government employees.

Besides, he announced 10 percent increase in pensions with effect from next month.

Moreover, he announced to increase the orderly allowance from Rs 14,000 to Rs 17,500.

Besides, the govt doubled the integrated allowance for employees in basic pay scale one to five has from Rs 450 to Rs900.

The Finance Minister further said it proposed the minimum wage increased to Rs20,000 to reduce the inflationary pressures on the low income groups.

GROWTH

The Finance Minister said the government has fixed 4.8 percent growth target for the next financial year, which would be broad based as it would encompass all the key sectors of the economy.

He said we intend to undertake a series of measures to achieve six to seven percent growth over the next two to three years.

The Minister said an agricultural transformational plan has been devised to increase productivity. Under this plan, support will be provided from water to seeds, fertilizer, agri-credit, tractors and machinery, commodity warehousing, cold storage and food processing industry.

He said we are investing in establishment of Special Economic Zones.

Govt is supporting new exports in IT sector and agro-based industries to increase our exports.

He said we are endeavoring to make CPEC a platform that will also include relocating industries.

Furthermore, he said, this will provide employment opportunities and bolster our exports.

In addition, we will expend earnest efforts in promoting Foreign Direct Investment in export sector.

Shaukat Tarin said they designed a package of tax incentives specially for the housing schemes undertaken under the Naya Pakistan Housing Authority.

He said the government is providing a subsidy of 300,000 rupees for low-income households to enable them to build their own houses.

For this purpose, the govt proposed an allocation of Rs 33 billion in the budget.

He said banks are participating in a financing programme. So far, it attracted applications of more than Rs 1 billion.

FOOD/WATER

The Finance Minister said the government is placing highest priority to uplift the agriculture sector.

He said 12 billion rupees are being allocated for various agri-related initiatives.

These include one billion rupees for locust emergency and food security projects. Rs 2 billion for enhancing productivity of rice, wheat, cotton, sugarcane and pulses also proposed.

Rs 1 billion for enhancing oil cultivation on commercial scale and three billion rupees for improvement of water courses.

Shaukat Tarin said that the govt proposed a total of Rs 91 billion in the budget for ensuring water security. That exclude hydel energy generation projects.

Moreover, Govt is earmarking Rs 57 billion for Dasu Hydropower project and Rs 23 billion for Diamer-Bhasha.

Besides, it is allocating Rs 6 billion for Mohmand Dam and Rs 14 billion for Neelum-Jhelum hydropower project.

ENERGY

The Finance Minister said 118 billion rupees are being allocated in the budget to ensure energy security. He said 7.5 billion rupees are being earmarked for 1000 KVs Islamabad West and Lahore North transmission lines; 8.5 billion rupees for evacuation of 2160 MW of power from Dasu; 5.5 billion rupees for evacuation of power from Suki Kinari, Kohala, Mahal Hydropower project, and 12 billion rupees for secondary transmission lines in Hyderabad and Sukkur. He said we will invest in completing the 1200 MW of coal-fired power projects in Jamshoro for which 22 billion rupees will be allocated. 16.5 billion rupees are being proposed for K-I and K-II in Karachi and fifth extension of Tarbela Hydropower project.

REGIONAL DISPARITIES

Meanwhile, he also referred to the special development packages announced for different regions.

The Finance Minister said of allocating Rs 20 billion for accelerated development plan for Southern Balochistan.

Rs 25.4 billion for Karachi Transformation Plan and Rs40 billion for socio-economic development of Gilgit-Baltistan.

He proposed Rs 19.5 billion rupees for development of different districts of Sindh.

He said the government attaches special attention to the development of tribal districts. It has increased allocation for them to 54 billion rupees. This includes 30 billion rupees for 10 yea development plan.

SOCIAL SECTOR

The Finance Minister said the government has made social sector improvement the key priority in areas.

Those areas include health, education, sustainable development goals, climate change for which Rs118 billion proposed in the PSDP.

Moroever, This includes thirty billion rupees for health, forty four billion rupees for higher education and sixty eight billion rupees for achievement of SDGs.

VACCINATION

Shaukat Tarin said of spending $ 1.1 billion on importing COVID-19 vaccine. Besides, govt is providing funding for local production of anti Covid vaccine. He said they estimated vaccination of over one hundred million people by June next year.

Moreover, govt proposed Rs100 billion to meet exigencies related to COVID-19.

INITIATIVES

The Finance Minister said of allocating Rs10 billion for Kamyab Pakistan Program.

He further said of establishing an anti-rape fund at Rs 100 million.

To undertake a new population census next year, Centre proposed to allocate Rs 5 billion as federal share.

It eyes a similar amount will be allocated to hold local government elections.

He said the federal government will extend financial support of Rs 20 billion to PIA and Rs 16 billion to Pakistan Steel Mills.

TAX INCENTIVES

The Finance Minister announced several tax incentives and exemptions for various sectors to promote business activities and provide relief to the general public.

The Minister said it is proposed that small cars up to 850 CC capacity may be exempted from levy of federal excise duty besides reducing sales tax rate from 17 percent to 12.5 percent and withdrawing value added tax.

He said the government is encouraging manufacturing and use of electric vehicles.

For this purpose, various tax exemptions and concessions proposed.

Those include tax exemption on import of Completely Knocked Down (CKD) kits for local manufacturing of electric vehicles.

Reduction in sales tax rate on locally manufactured electric vehicles from 17 percent to one percent also proposed.

Withdrawal of value addition tax on import of electric vehicles and CKD kits and Federal Excise Duty on four wheelers electric vehicles proposed.

He said zero rating on export on IT and IT-enabled services is being proposed by amending ICT (Tax and Services) Ordinance 2001.

Federal excise duty

He said federal excise duty is being withdrawn on industries related to cooking oil, ghee and steel products in erstwhile FATA and PATA.

FDE is also being withdrawn on juices, which was earlier imposed through Finance Act 2019.

Tarin further said a cottage industry having annual turnover of over ten million rupees will no longer be required to register for sales tax.

To facilitate the registered persons and enhancing ease of doing business, we are allowing constructive payment for adjusting payable and receivable under Section 73 of Sales Tax law.

He noted removal of restriction on input tax allowance under sales tax law a major demand from business community.

Value addition

However, considering the importance of minimum value addition on VAT model, it proposed to eliminate this restriction on highly regulated corporate sector.

That means the public limited companies listed on Pakistan Stock Exchange.

Tarin noted it a major breakthrough for major corporatization of economy and facilitation of regulated corporate sector.

Moreover, he said it proposed to grant exemption on import of high quality art and printing paper for the purpose of printing and publication of Holy Quran.

Shaukat Tarin also mentioned establishment of special technology zones throughout the country.

Further, budget proposed to encourage investment in these zones tax exemption on import of plant, machinery, equipment and raw material.

He said the government is encouraging storage of grain and agriculture activity and improve shelve lives of commodities in rural areas.

Therefore, he said to propose to grant exemption on locally produced silos.

FED on telecommunication

It proposed decrease in the rate of FED on telecommunication from 17 to 16 percent. He said we are proposing withdrawal of FED on merchant discount rate charged on POS by banks.

It aims to encourage the businesses to carry out transactions through POS machines.

The Minister said the government is introducing a number of tax measures as well as concessions for promotion of digital economy.

He said we are proposing a new prize scheme for the customers making purchases from tier-1 retailors integrated with FBR.

He announced disbursing the monthly prizes of Rs 250 million to customers holding system generated invoices which the tier-1 retailors issued through computer balloting.

Tarin also mentioned tax exemption on import of auto disable syringes and their raw materials. He stated exemption on oxygen cylinders to mitigate adverse effects of COVID-19.

TAX

Shaukat Tarin said it is being proposed to bring thirty party sales made through online market places within the purview of sales tax.

He further said FED on mobile phone calls exceeding three minutes, internet data usage and SMS messages is being proposed.

He said sugar is being proposed to be included in the third schedule to the Sales Tax Act so that tax is charged on actual retail price of the product.

This measure would not only ensure due payment of tax but also help in putting a more effective price control mechanism.

The Minister said we have carried out an in depth exercise to review tax exemptions under sales tax

and identified number of non-essential items for withdrawal from the purview of exemption.

Moreover, he mentioned same exercise in respect of reduced rates of taxation.

They did that by excluding exemptions currently available for ordinary food, education and health related items.

INCOME TAX RELIEF

The Finance Minister also mentioned proposed omitting of 12 withholding tax provisions as part of income tax relief measures.

These related to banking transactions, Pakistan Stock Exchange, margin financing air travel services, international transactions through debit and credit cards and extraction of minerals.

Withholding tax on mobile phone services has been reduced to 10 percent for the next financial year.

It proposed reducing withholding tax from 8 to 3 percent on oil field, warehousing, security, logistic, telecommunication and collateral management services.

It proposed reduction in the rate of capital gain tax o 12.5 percent from 15 percent to alleviate the difficulties which the stock market faced in the past two years.

The Minister said it is proposed to rationalize the minimum tax through three different types of interventions.

These include gradually reducing general tax rate from 1.5 percent to 1.25 percent.

Enhancing threshold for individuals and associations of persons to pay minimum tax on turnover basis from Rs10 million to Rs100 million also mentioned.

It further proposed that no tax may collection on import of books, journals, agriculture equipment and motor vehicles in Completely Built Unit (CBU) condition up to 850 CC.

SECTOR INCENTIVES

Shaukat Tarin said SMEs having turnover exceeding hundred million rupees

and up to 250 million rupees shall pay tax at the rate of 0.5 percent of their turnover or 15 percent of their taxable income at their own option.

Furthermore, he mentioned taxing at a reduced rate of 01 percent under final tax regime all the services receipts, brought to Pakistan through banking channel.

He further assured of no question thereafter about it.

The Minister announced SEZ enterprises exemption from minimum tax for tax year 2021 and onwards.

To promote innovation, technology and entrepreneurship, special tax incentives proposed for special technology zones.

COVID INCENTIVE

Moreover, the Minister said of extending exemptions given on COVID-19 medical equipment or items for further six months.

He also underlined exempting additional 35 raw materials required in manufacturing of these items from customs duties.

Exemptions aim to ensure supply of COVID-19 related medicines at affordable prices.

DUTIES

The Finance Minister also stated increase in regulatory duties on import of mobile phones.

Similarly, govt is enhancing regulatory duties on import of tyres to encourage and protect the local industry.

GTV