Tag: budget 2023-24

  • ECC greenlights 25% sales tax increase on domestic cars

    ECC greenlights 25% sales tax increase on domestic cars

    In a significant development, the Economic Coordination Committee (ECC) of the Cabinet has given its nod to a proposal for increasing the sales tax on vehicles manufactured and assembled within the borders of Pakistan.

    The decision was finalised during a pivotal ECC meeting held in the capital city on Wednesday.

    The proposal, presented by the Federal Board of Revenue (FBR), suggested an elevation in the sales tax applicable to the auto sector, particularly on vehicles produced and assembled domestically.

    Following a comprehensive deliberation, the ECC cabinet sanctioned the process for determining a 25 per cent sales tax rate on locally manufactured and assembled vehicles.

    As per the endorsed proposal, vehicles valued at Rs4 million or equipped with 1400 cc engines will be subject to a 25 per cent sales tax.

    This taxation structure is anticipated to persist in the upcoming budget, signalling potential implications for consumers as a result of the price hike.

    The imposition of a 25 per cent sales tax on 1400cc vehicles is expected to have a direct impact on the pricing structure, leading to a potential surge in vehicle costs. The ECC’s decision aligns with ongoing efforts to streamline fiscal policies in the country.

    In addition to this decision, the ECC also greenlit a substantial subsidy of Rs7,492.75 million under the Ramazan Relief Package 2024.

    Chaired by Caretaker Finance Minister Shamshad Akhtar, the meeting aimed to address the financial aspects of the relief package, particularly subsidising the targeted beneficiaries of the Benazir Income Support Programme (BISP).

    According to a press statement issued by the finance ministry, the subsidy allocation is part of the budget for 2023–24, with a primary focus on providing support to those identified under the BISP. This move underscores the government’s commitment to social welfare initiatives.

    Furthermore, the ECC approved a proposal related to the “Permission to Import Wheat and Export of Wheat Flour under the Export Facilitation Scheme 2021.” This decision, brought forth by the Ministry of Commerce, reflects the government’s strategic measures to balance wheat supply and demand dynamics in the country.

    The ECC meeting signifies a pivotal moment in shaping economic policies, with decisions that carry far-reaching implications for both the automotive sector and social welfare initiatives in Pakistan.

    The approved proposals are poised to contribute to the broader economic landscape and address pertinent challenges in the nation’s fiscal framework.

  • ECC approves Rs7.49 billion Ramzan Relief Package

    ECC approves Rs7.49 billion Ramzan Relief Package

    In a significant move to provide relief to the general public during the upcoming Ramazan, the Economic Coordination Committee (ECC), in its latest meeting chaired by the Federal Minister for Finance, Revenue, and Economic Affairs, Dr Shamshad Akhtar, approved the Ramzan Relief Package-2024.

    The approved package, with a net amount of Rs7.49 billion, is specifically designed to benefit targeted beneficiaries of the Benazir Income Support Programme (BISP). This allocation is part of the budget for the fiscal year 2023-24.

    During the meeting, the committee also discussed and gave the green light to a summary from the Ministry of Commerce’s Tariff Policy Wing.

    The summary pertained to “Individual Tariff Rationalization Proposals from Different Sectors for Review of Custom Duties.” Following thorough deliberations, the committee advised that tariff rationalization should be coordinated with the overall trade policy.

    Furthermore, a proposal related to the “Permission to Import Wheat and Export of Wheat Flour under Export Facilitation Scheme 2021” was presented by the Ministry of Commerce.

    The ECC not only approved this proposal but also directed the relevant ministries to prepare comprehensive plans aimed at enhancing opportunities for value-added exports.

  • Budget, May 9 top agendas during PM-COAS meeting

    Budget, May 9 top agendas during PM-COAS meeting

    Chief of Army Staff (COAS) General Asim Munir met Prime Minister Shehbaz Sharif on Monday at PM house, right after the presentation of the federal budget, DAWN has reported.

    The National Assembly later passed a resolution right after the meeting that demands instant prosecution of the miscreants involved in the May 9 attack on state and military installations under the Pakistan Army Act, 1952.

    No communication about the meeting has been released but according to sources close to the Prime Minister, he did meet the COAS.

    Reportedly, the Geberal said that there will be no mercy for the planners, instigators and motivators involved in the May 9 riots and their cases will be tried under the Army Act. The meeting between the PM and COAS is also considered important in the backdrop of the recent fiscal budget presentation.

    In a tweet, Prime Minister Shahbaz Sharif said, despite the domestic and global obstacles, budget 2023-2024 promises to turn things around and shape an unobstructed path for the country.

  • Budget 2023-24 prioritises promoting economic growth, says Ishaq Dar

    Budget 2023-24 prioritises promoting economic growth, says Ishaq Dar

    Federal Minister for Finance and Revenue, Ishaq Dar, delivered a comprehensive assessment of the FY2023-24 budget during a post-budget press conference in Islamabad. He highlighted the distinctive nature of this budget compared to previous traditional budgets, emphasising its focus on fostering economic growth.

    Dar shared that the coalition government is committed to addressing the concerns of traders before finalising the federal budget in parliament. In order to accomplish this, he announced the formation of two committees to address business-related issues and technical matters.

    These committees, customary within the Federal Board of Revenue (FBR), will be established by the FBR chairman by Monday. Their purpose is to ensure comprehensive consideration of any overlooked aspects and provide a platform for individuals to voice genuine reservations.

    The finance minister refuted claims of introducing new taxes this year and emphasised the government’s efforts to provide substantial relief. He defended the allocation of Rs950 billion and Rs200 billion from the Public and Private Partnership mode, considering it a notable achievement. Dar reiterated the budget’s departure from traditional approaches, with a strong emphasis on fostering progress and economic growth.

    Dar expressed the government’s determination to rectify past economic losses by promoting employment opportunities, curbing inflation, and generating more jobs. Consequently, he anticipated a decrease in the policy interest rate.

    Read more: Govt allocates only Rs97 billion for education in budget 2023-24

    The minister projected inflation to be around 21 per cent in the upcoming fiscal year (2023-24), while estimating government expenditure at Rs14,040 billion.

    Addressing the power sector, Dar allocated over Rs1900 billion exclusively for its development. He stressed the importance of implementing necessary reforms to improve this sector. He also clarified that no new subsidies would be introduced in the renewable energy sector, despite its prominence in the budget.

    Furthermore, the minister addressed rumors regarding the withdrawal of edible oil, refuting such claims and affirming that no such action had been taken.

  • Govt allocates only Rs97 billion for education affairs and services in budget 2023-24

    Govt allocates only Rs97 billion for education affairs and services in budget 2023-24

    The federal government has designated a budget of only Rs97.098 billion for education affairs and services in the fiscal year 2023-24. This allocation reflects a 5.5 per cent increase compared to the revised allocation of Rs91.777 billion for the current fiscal year.

    Pakistan’s public expenditure on education, as a per centage of GDP, is estimated to be 1.7 per cent in the fiscal year 2022-23, a slight increase from 1.4 per cent in the previous year. However, this figure remains the lowest in the region.

    Of the total allocation, the bulk of expenditure amounting to Rs76.589 billion has been allocated for Tertiary Education Affairs and Services in the budget for 2023-24, accounting for 79 per cent of the total allocation under this category.

    Furthermore, the government has designated Rs4.468 billion for pre-primary and primary education affairs in the upcoming fiscal year, compared to Rs3.786 billion in 2022-23. Additionally, Rs10.778 billion has been earmarked for Secondary Education Affairs and Services in 2023-24, as opposed to Rs8.863 billion in the previous year.

    The budget for administration has also increased, with Rs3.698 billion allocated compared to the revised figure of Rs2.010 billion for 2022-23, which was later revised to Rs2.430 billion.

    Since the implementation of the 18th Constitutional Amendment, education has been devolved to the provinces, making the federal government primarily responsible for financing higher education.

    According to budget documents, the Higher Education Commission (HEC) has been allocated Rs59.71 billion under the Public Sector Development Programme (PSDP) for 2023-24, a significant increase from the previous year’s allocation of Rs44.718 billion.

  • Budget 2023-24: Finance Minister announces tax relief measures for IT sector and freelancers

    Budget 2023-24: Finance Minister announces tax relief measures for IT sector and freelancers

    In a recent announcement, the federal government has unveiled a series of measures aimed at fostering growth and investment in the freelancing and information technology (IT) sectors. The government has decided to implement a reduction in tax rates for investments in the IT sector, provide tax breaks to freelancers, and establish a favorable environment for investment by normalizing duty-free equipment provisions.

    During the budget presentation for the fiscal year 2023-24, Finance Minister Ishaq Dar highlighted the importance of the IT sector and its immense talent pool within the country. To support the growth of IT exports, the government plans to extend the current 0.25 per cent discounted income tax rate for the next three years.

    Recognizing the significance of banks in facilitating investment in the IT sector, the finance minister proposed a reduced tax rate of 20 per cent for banks involved in lending to this sector. This reduction aims to alleviate the burden on banks, as the existing tax rate for investments stands at 39 per cent.

    Additionally, the government has recommended providing Duty-Free Equipment privileges to incentivize investment in the IT sector. Moreover, the minister has suggested granting the industry the status of Small and Medium Enterprises (SMEs), enabling individuals to avail themselves of special and exclusive discounted income tax rates applicable to this sector.

    In a move to streamline processes for IT and IT-related services exporters, Minister Dar proposed the issuance of Automated Exemption Certificates to non-residents within 30 days. Furthermore, the government plans to reduce the Goods and Services Tax (GST) from 15 per cent to 5 per cent specifically for IT and ITeS services in the Islamabad Capital Territory (ICT).

    To support the freelancing community, Minister Dar recommended exempting individuals from the obligation of filing a sales tax return in order to benefit from the concessional rate of 0.25 per cent. Emphasizing the vital contribution of freelancers to the country’s foreign exchange earnings, the minister suggested that those whose IT and IT-enabled services exports were less than $24,000 in the previous fiscal year should be exempted from sales tax registration and allowed to file a simplified single-page income tax return.

    These measures underscore the government’s commitment to fostering a conducive business environment and encouraging investment in the freelancing and IT sectors, thereby facilitating economic growth and job creation.

  • Govt expected to reduce petrol price by Rs10 per litre in a pre-budget relief move

    Ahead of the much-anticipated federal budget for 2023-24, set to be announced on June 9, the government is planning to alleviate the burden of inflation by reducing the prices of petroleum products, according to industry officials.

    Starting from June 1, it is expected that the price of petrol will decrease by Rs10 per litre due to a decline in the ex-refinery price. Industry insiders have revealed that the ex-refinery price of petrol is projected to decrease by Rs10-12 over the next two weeks. However, due to exchange rate adjustments, the government will likely pass on relief of up to Rs10 per litre to consumers.

    Furthermore, industry officials have indicated that the ex-refinery price of diesel is showing a decline of Rs4-5 per litre in the next review. The government may incorporate this decrease during the upcoming fortnightly review, offering relief to diesel consumers.

    According to The News, in the previous price review, the government implemented a substantial reduction of Rs30 in the price of diesel. This resulted in a decrease from Rs288 to Rs258 per litre. Similarly, the price of petrol was slashed by Rs12, dropping from Rs282 to Rs270 per litre.

    These measures are aimed at mitigating the impact of rising prices on the general public and easing the financial burden faced by individuals as the government prepares to present the federal budget for the upcoming fiscal year.

  • Govt to maintain 18% GST rate in upcoming budget 2023-24

    Govt to maintain 18% GST rate in upcoming budget 2023-24

    In the forthcoming budget for 2023-24, it is anticipated that the government will maintain the current standard rate of General Sales Tax (GST) at 18 per cent. Additionally, efforts are being made by the government to increase the rates of withholding taxes, where applicable, with the aim of augmenting tax revenues.

    Another aspect being considered is the implementation of amendments for retailers, with the objective of including a larger number of businesses within the tax bracket. It is worth noting that previous schemes designed to entice retailers into the tax system have proved unsuccessful over the past few decades.

    According to The News, various proposals are currently being deliberated upon for the imposition of Minimum Asset Tax (MAT) on both movable and immovable assets. However, the Federal Board of Revenue (FBR) has been advised to seek constitutional validation for these proposed taxation measures in order to avoid potential legal disputes.

    Moreover, the government is exploring options to enhance documentation within the property sector, as part of its ambitious goal to achieve a tax collection target ranging between Rs9 and Rs9.2 trillion for the upcoming budget.

    These proposals were thoroughly discussed in a meeting chaired by Finance Minister Senator Ishaq Dar, which focused on budgetary considerations within the Finance Division. Present at the meeting were State Minister for Finance Dr Ayesha Ghous Pasha, Special Assistant to the Prime Minister (SAPM) on Finance Tariq Bajwa, SAPM on Revenue Tariq Mehmood Pasha, Chairman of the Reforms and Resource Mobilization Commission (RRMC) Ashfaq Yousuf Tola, the finance secretary, FBR chairman, and other senior officials from the Finance Division and FBR.

    During the meeting, FBR Chairman Asim Ahmad provided a comprehensive presentation on the budgetary proposals for the Federal Budget 2023-24.

  • Pakistan’s IMF bailout programme revival delayed: blame game between Pakistani authorities and IMF

    Pakistan’s IMF bailout programme revival delayed: blame game between Pakistani authorities and IMF

    Pakistani authorities and the International Monetary Fund (IMF) are blaming each other for the delay in reviving the IMF bailout programme. The IMF approved a $6.5 billion bailout package for Pakistan in 2019, of which $1.1 billion is still outstanding.

    However, issues related to fiscal policy adjustments have delayed the release of the funds since November. The delay has raised concerns as Pakistan has less than a month’s worth of foreign exchange reserves and needs the IMF package to avert defaulting on external payment obligations.

    With the expiry of the existing IMF programme on June 30, 2023, Pakistan’s options for reviving the IMF programme are shrinking with every passing day.

    While Pakistani authorities argue that the IMF is playing politics, IMF sources say they are still waiting for confirmation on the remaining $2 billion from the World Bank and Asian Infrastructure Investment Bank, as well as seeking commercial loans from banks.

    According to Geo, Dr Khaqan Najeeb, former adviser Ministry of Finance, has called for short-term measures, such as funding from friendly countries, the revival of the IMF programme, clarity on programme completion dates, and work on the budget for 2023-24 to be undertaken to avoid Pakistan being near the brink of default.