Finance Minister Syed Naveed Qamar, on Wednesday unveiled a Rs 2.01 trillion taxes-laden federal budget for 2008,09, with some relief for the poor and the salaried class people. In his budget speech in the National Assembly, the minister presented the details of budgetary measures to be taken in next fiscal year for a quick recovery of the ailing economy.
-- Additional tax impact of Rs 84 billion
-- 5% FED on motor cars
-- FED in VAT mode 16%
-- Excise on telecom services raised to 21%
-- FED on cement up by Rs 150/tonne
-- 10% custom duty hike on non-essential imports
-- I/Tax exemption limit raised from Rs 150 to 180 K for salaried men.
For women exemption raised to Rs 240K
-- 0.5% minimum tax on turnover withdrawn
-- No change in tax regime on listed shares
-- 20% rise in pay & pension
-- 2% hike in NSS rates
-- 10% advance tax on electricity bills
-- CNG buses exempted from duty;
-- 18 drugs for cancer/heart treatment made duty-free.
The increased target for FBR set at 1.25 trillion against Rs 990 billion revised estimates of 2007-08. Duty on import of 300 items has been increased by 5 percent. Imported and locally made cars, travelling, mobile phones communication services will cost more.
GDP growth target set at 5.5 percent against 5.8 percent of the outgoing fiscal. Inflation rate at 12 percent. Fiscal deficit and current account deficit projected at 4.7 percent and 6 percent of GDP, respectively.
The government employees and pensioners will get 20 percent increase in their basic salaries and pensions. Minimum pension has been increased from Rs 300 to Rs 2000. Adhoc government employees up to grade 15 to be regularised. Travel allowance for 1-19 BPS increased by 100 percent. Medical allowance for grade 1 to 16 is increased to Rs 500 per month.
The poor will be issued Benazir cards for special relief of Rs 1000 per month. NADRA's record will be used to identify the poor for the relief. Working women will get incentive in their income tax limit. One million small houses will be constructed for the government employees in 2008-09.
The minister announced a cut in subsidies to curtail borrowing from commercial banks at a manageable level. Non-development expenditure except salaries has been frozen. Public Sector Development Programme (PSDP) increased to Rs 549.7 billion. Defence budget increased by Rs 25 billion to offset inflationary affect.
Tax on houses and property deals has been increased. A substantial increase in social sector allocation has also been announced. Education sector allocation remained at the last year's level. The minister added that reduction in fiscal deficit, rationalisation of subsidies, build-up up of forex reserves and removal of bottlenecks for economic growth were among the government's top priorities for the next fiscal year.
He said textile industry will get round the clock power supply whereas other key industries and tubewells will have electricity for more hours. He said wheat support price to be enhanced in August-September for wooing the growers for better output and a cold chain to be established for produce and better value and return to the growers.
The Minister added that subsidy on DAP has been doubled to help the growers get more farm productivity. The Finance Minister said NFC award will be reconstituted as soon as nominations from the provinces are received.