ISLAMABAD: The federal government on Friday proposed a number of tax relief and revenue rationalization measures to achieve higher economic growth and development that commensurate with the country's true trade and economic potential.
Minister for Finance Ishaq Dar while presenting the federal budget for the fiscal year 2016-17 before the National Assembly proposed different relief and revenue measures in Income Tax, Withholding Tax, Sales Tax, Federal Excise Duty and Customs Duty regimes.
Announcing relief measures in the Income Tax regime, the Finance Minister said in order to encourage corporatization, the corporate tax has been reduced to 31pc for Tax Year 2017 and will further come down to 30pc in Tax Year 2018.
He said, in order to encourage the organized sector, tax credit which is 20pc at present on tax payable for enlistment in stock exchange and available for one year, is proposed to be made available for two years instead of one year.
The Finance Minister said in order to promote activity in the housing sector and meet the deficiency of available housing units, a current deductible allowance upto Rs. one million on payment of profit on debt for construction of a new house or acquisition of house, is proposed to be increased to Rs. two million.
In order to promote relief on education expenses, which are unbearable for low income groups, it is proposed that individuals having taxable income less than Rs. one million should be given tax relief equal to 5pc of school fee upto Rs. 60,000 per child per annum, he added.
The Finance Minister said at present a tax credit is available for contribution in an approved Pension Fund with a maximum of 20% taxable income, adding, an additional contribution of 2pc for persons above 41 years of age to a maximum of 50pc of taxable income is available upto June 30, 2016.
It is proposed that the period may be extended upto June 30, 2019 with the condition that the maximum tax credit be restricted to 30pc of taxable income of the preceding year, he added.
The Finance Minister said to facilitate the low income group, it is proposed that the final tax on Commission Income of Life Insurance Agents may be reduced from the current 1pc to 8pc for the filers on commission receipts utpo Rs. 0.5 million.
Ishaq Dar said the government kept average current deficit to a very low level of 1pc of GDP.
He said, Stock Exchange Index stood at 19,916 on 11th May 2013,
has now surged to above 36,000, adding, in the same period, market capitalization has increased from Rs. 5.2 trillion to Rs. 7.391 trillion and from $ 51.3 billion to $70.5 billion.
The merger of Lahore, Karachi and Islamabad stock exchanges, which was pending for the past 15 years, was completed this year.
Ishaq Dar said reduction of fiscal deficit, raising tax revenues, continued focus on energy, exports promotion, poverty and unemployment, income support programme (BISP), Development and Promotion of ICT Sector were main elements of government's budget strategy.
About medium-term macroeconomic framework, he said, "Our budget strategy is embedded in a three-year medium term macroeconomic framework, spanning the period 2016-19."
He said increase in GDP growth, investment to GDP ratio, decrease inflation, cut in fiscal deficit, increase in tax to GDP ratio besides enhancing foreign exchange reserves to $ 30 billion, are the main features of the framework.
Regarding development plan, he said the government would focus on water, power, highways, railways and human development sectors which contribute most to economic development.
The minister said a special development programme has been devised for Temporary Displaced Persons (TDPs) and Security Enhancement.
To cater for the needs of hosting, rehabilitation and the return of TDPs and security enhancement, a special development programme of Rs 100 billion has been provided in the budget.
About China-Pakistan Economic Corridor (CPEC), he said, $46 billion investment will result in improvement of economies of the four provinces and special areas of the country.
He said keeping in view significant role Gwadar has to play for strengthening the economy, the government has taken development of this area very seriously.
In order to strengthen exports and remove bottlenecks, he announced a number of measures to increase exports.
Ishaq Dar said to further enhance the export competitiveness of textile sector, measures including setting up of technology upgradation fund, duty free import machinery, withdrawal of customs duty on manmade fibers, plant breeders right act, have been announced.
He said agriculture is backbone of the country's economy and keeping in view difficulties faced by this sector, special steps have been taken which include concessions of taxes and duties, reduction in prices of fertilizer, enhancement in the target of agriculture credit, reduction of cost of credit, credit guarantee scheme, concessional electricity tariff for agriculture tube wells, concession of customs duty for dairy, livestock and poultry sectors, concessions of customs duty for fish farming, relief on cool chain machinery, exemption of sales tax on pesticides and exemption to silos.
He said for industrial development the special measures included enhancing tax credit on employment generation, tax credit for making sales to registered persons, tax credit for balancing, modernization and replacement of plant and machinery, tax credit for establishing new industry, tax credit for expansion of existing plant or new project, exemption on investment in green-field industrial undertakings, reduction in Customs duty on raw materials and machinery, abolishing regulatory duty on bead wire and protection of local industry.
Dar said several measures have been proposed in the budget to save energy and promote alternative sources of energy.
He said these include concessions of customs duty on local manufacturing of LEG lights, incentivizing import of items used
in renewable sources of energy technologies, extension in relief on import of solar panels and exemption to dumper trucks for Thar Coal field.
To further strengthen the financial sector, the measures -- financial institutions secured transaction bill 2016 through which loans related charge on moveable assets can be created and deposit protection Bill 2016 through which small depositors will be protected -- are being taken, he said.
He said for Prime Minister's health Insurance Scheme, the government would provide insurance cover for tertiary healthcare and hospitalization for several ailments.
During 2015-18, around Rs. 9 billion premium will be paid through this scheme.
About Prime Minister's special schemes, he said, for the next financial year, an outlay of Rs. 20 billion has been allocated for these schemes.
He said, the federal government has started the implementation of Gender Responsive Budgeting at the federal level, adding, "We are inviting the provincial governments to be part of this reforms."
Shedding light on estimates of revenues and expenditures of the next budget, he said, gross revenues receipts for 2016-17 are estimated at Rs. 4,915 billion, compared to the revised figures of Rs. 4,332 billion for 2015-16.
The share of provincial governments, out of these taxes, will be Rs. 2,136 billion. For the year 2016-17, net resources left with the federal government will be Rs. 2,781 billion compared to the revised estimates of Rs. 2,481 billion for 2015-16 showing an increase of 12.1PC.
Total expenditure for 2016-17, is budgeted at Rs. 4,395 billion compared to the revised estimates of Rs. 4,095 billion for 2015-16, showing an increase of 7.3pc.
He said, the current expenditure is estimated at Rs. 3,400 billion for 2016-17 against a revised estimate of Rs. 3,282 billion for 2015-16 showing an increase of 3.6pc.
Ishaq Dar said, the defence budget is being increased from Rs. 776 billion for 2015-16 to Rs. 860 billion for 2016-17, which is an increase of about 11pc.
About development budget, he said against a revised estimate of Rs. 661 billion for PSDP during 2015-16, the federal government budgeted Rs. 800 billion for 2016-17, showing an increase of nearly 21pc.
This also includes the Special Development Programme for security enhancement as well as for rehabilitation and resettlement of TDPs, he added.
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