ISLAMABAD: The federal government has imposed Rs415 billion in new taxes in the 2023-24 budget in order to secure the International Monetary Fund (IMF) loan.
While winding up the budget speech, Finance Minister Ishaq Dar on the floor of the National Assembly said that “Pakistan has agreed on Rs215 billion taxes after three-day parleys with the officials of the IMF to complete the 9th review under the EFF, pending due to the country’s external financing gap.”
He also said that the government has fixed Rs 9.415 trillion as the new revenue target of the Federal board of Revenue. Earlier, the Finance minister on June 9, 2023 announced that FBR revenue target would be Rs 9.200 trillion in 2023-24.
On the other hand, he said that the provincial share would go up from Rs 5.276 tr to Rs 5.390 tr in next fiscal year.
Finance minister further said that Pakistan would bring down the running expenditure by Rs 85 billion, which would have no impact on the proposed development budget, the raise in salaries and pensions of the federal government employees.
He said the government held talks with the IMF with complete sincerity and assured the parliament that once things with the international lender were settled; all details would be made public by placing the agreement on the official website of the Ministry of Finance.
He also said that the federal government’s total expenditure for 2023-24 is increased from Rs 14.460tr to Rs14.480 tr and pension estimate from Rs761 billion to Rs801bn.
Similarly, he said that the subsidy estimate would now be Rs 1.064 tr and grants would be Rs 1.405 tr, adding as a result of all these measures, the overall budget deficit would come down, with a cushion of Rs300bn [Rs215 billion taxes and Rs 85 billion reduction in running expenditures].
Sources said that the government has imposed additional 2.5 % tax on those individuals whose income is above 2.4 million annually.
Similarly, the government has imposed 5 percent Federal Excise duty on Fertilizer besides one percent increase in tax on sale and purchase of property, sources added.
Meanwhile, the Finance Minister said that we have made the super tax more progressive means that it will be imposed on all sectors or categories which were earlier confined to only 15 sectors.
Now the FBI will charge 1 percent super tax on income ranging between Rs150 to 200 million, 2 percent on Rs200 to Rs 250 million, 3 percent on Rs250 to Rs 300 million, 4 percent on Rs300 to Rs 350, 6% on Rs350 to Rs 400, 8 percent on Rs400 to Rs500 and 10 percent on above Rs 500 million income across all the sectors or categories, as per the finance bill.
He said that we have proposed to reintroduce advance adjustable withholding tax at the rate of 0.6 percent on cash withdrawal from banks by non-ATL persons exceeding Rs 50,000.
This will help in documentation of the economy besides FBR would be able to bring more and more people into the tax net, Dar added.
He also announced an intact 10 percent withholding tax on bonus shares issued by companies. Adding to that he said that the shareholders instead of the company will pay this tax.
While keeping the enabling proposal of windfall gain tax in the Finance bill, he said that the government will impose windfall gain tax when it thinks that specific sectors rather than individuals have earned extraordinary profit due to external factors.
Dar in his speech also announced that FED on Energy inefficient fans at the rate of Rs2000 per fan m, which will be applicable from January 1, 2024. The industry has assured that it will take time to convert its business to Energy efficient fans.
Informing the members, Dar also said that we have decided to strengthen the Alternative Dispute Resolution Committee (ADRC) to solve 62000 tax cases worth Rs3.2 trillion pending in courts.
A three member committee composed of retired high court judges as well as Chief Commissioner and a nominee of taxpayers will decide the tax cases, he explained.
The Finance minister also said that the Petroleum Development Levy on Diesel and MOGAS will get Rs60 per litre from Rs50 per litre.
Overseas Pakistanis are our asset so we have decided to allocate Rs 80 Billion to facilitate their remittances, he announced.
He also said that we have established a pension fund in budget 2023-24 and the government will apply a contributory pension fund scheme due to an extraordinary surge in pension bill.
We will have to make reforms as the pension expenditures have become unsustainable, he added.
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