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Budget 2021-22
  • Updated 25 Jun, 2021 03:51pm

    Tax relief extended to cars up to 1,000cc, says Tarin

  • Published 18 Jun, 2021 10:06pm

    KPK govt presents Rs1.12trn budget for FY22

  • Updated 18 Jun, 2021 09:31pm

    Balochistan approves budget for FY22 after protests delay proceedings

  • Updated 18 Jun, 2021 07:10pm

    Bilawal stresses on NFC Award, calls federal budget 'illegal'

  • Updated 17 Jun, 2021 07:21pm

    Shehbaz comes down hard on govt's budgets

Show More

Tax relief extended to cars up to 1,000cc, says Tarin

  • Finance minister says mobile phone calls longer than five minutes will now be taxed at Rs0.75
  • Announces reduction in tax rates for REITs and dairy sector
Updated 25 Jun, 2021

Finance Minister Shaukat Tarin has said the government will now impose a tax of Rs0.75 on mobile phone calls lasting longer than five minutes, adding that relief extended earlier to cars up to 850cc will now be expanded to vehicles up to 1,000cc as well.

In a session of the National Assembly on Friday, Tarin added income tax exemption on medical expenses will be given back to the salaried class while the tax on the provident fund income of government employees has been withdrawn.

Tax on milk and other dairy products, which was earlier announced to be increased to 17%, has been withdrawn as well, added the finance minister.

Stressing on Real Estate Investment Trusts (REIT), Tarin said, on the recommendation of stakeholders, tax has been reversed from 25% to 15%.

On the topic of oil refineries, he said incentives will be given.

The session, chaired by Deputy Speaker Qasim Suri, comes after the budget announcement earlier this month where Pakistan announced that it will target a growth of 4.8% in the coming fiscal year.

As it looked to strike a balance between growth and rising expenditure, some of the budget measures came under severe criticism including the tax on mobile internet usage.

However, Tarin said the tax on mobile internet usage and SMS has been withdrawn.

Tarin explains IMF challenge

The ex-banker said "harassment" by the Federal Board of Revenue is a problem for all citizens, because of which taxpayers do not file their returns and the country is unable to broaden its income tax net.

He shared that the government has been notified about at least 15 million people who are currently not paying their taxes, reiterating that the FBR will not approach these people directly. Instead, under the government's new plan, a third party will approach non-taxpayers.

Pakistan eyeing sustainable growth, says Tarin

Tarin stated that the government plans to set up a third party with a legal structure, adding that "we will only do an audit and talk to the tax payer", emphasising that the tax payer will not be penalised.


KPK govt presents Rs1.12trn budget for FY22

  • Chief Minister Mahmood Khan says coming fiscal year is one of resurgence and growth
  • Minimum wage increased to Rs21,000, salaries of govt employees hiked
18 Jun, 2021

The Khyber Pakhtunkhwa (KPK) government presented on Friday a Rs1,118.3-billion budget for fiscal year 2021-22, with an allocation of Rs371 billion for the annual development program (ADP) and Rs747.3 billion for current budget expenditure.

Chief Minister Mahmood Khan said the budget 2021-22 was aimed at resurgence and growth, adding that the provincial government was fully committed to investing maximum resources in the development of KPK and providing quality service delivery to its citizens.

He said it was due to the successful handling of the Covid-19 pandemic that the government had an opportunity to present a budget focused on growing the economy and providing maximum relief to the people.

“We plan to introduce long-overdue reforms on pensions: accountability and rewards of public servants; championing e-government and strengthening management of public finances,” he said.

The KPK government announced a 37pc increase in salaries of all those employees who did not take special allowances from the government.

Presenting the third budget of the government, KPK Finance Minister Taimur Jhagra said out of the total budget allocation, Rs919 billion has been earmarked for settled districts and Rs199.3 billion for the development of merged tribal districts during FY 2021-22.

Out of the total Rs371 billion ADP, the province has earmarked Rs270.7 billion for settled districts and Rs100.3 billion for merged tribal districts. Likewise, Rs648.3 billion has been earmarked for settled districts and Rs99 billion for merged districts in a total allocation of Rs747.3 billion for current budget expenditure.

The minister said the budget was based on five main pillars including a record increase in salaries of government employees, development budget, devoted services to people, increasing KPK's own resource revenue, and introduction of goal-oriented reforms and innovation in the overall governance system.

He said two innovative approaches, ‘development plus budget’ and ‘service delivery budget’, were being introduced under which Rs500 billion would be spent on mega projects such as Sehat Plus Cards, provision of furniture to govt schools, and increase in medicines' budget to public sector hospitals. Meanwhile, Rs424 billion out of Rs747 billion would be spent on 'service delivery' with priorities to payment of salaries of doctors, nurses, and teachers besides provision of medicines to hospitals and fuel to Rescue 1122 ambulances.

About the generation of income and revenue during 2021-22, the minister said Rs1,018 billion revenue and income target was set for FY 2021-22 that would be achieved from different financial resources, duties, and taxes.

He said Rs475.6 billion would be collected through federal taxes, Rs57.2 billion through a federal divisible pool of 1pc share under terrorism affected province, Rs26.5 billion under Gas and Oil royalty and surcharge (direct transfer), Rs74.7 billion under hydel new profit (according to MoU 2015-16) and arrears, Rs75 billion for provincial tax and non-tax revenue, Rs85.8 billion through foreign development assistance (for settled areas) and Rs3.3 billion as foreign development assistance (for merged areas), Rs187.7 billion under special assistance grant for the merged areas and Rs132.5 billion from other revenue resources.

About details of expenditure during FY2021-22, the minister said a total of Rs374 billion would be spent on salaries including Rs60 billion in merged areas and Rs314 billion in settled districts. Similarly, Rs92.1 billion would be utilised for payment of pension including Rs0.1 billion for merged areas and Rs92 billion for settled districts.

An amount of Rs244.6 billion was proposed for expenditures under Provincial Development Program including Integrated Implementation Program (AIP) for merged areas, he said, adding Rs17.4 billion is being earmarked for the Annual Development Program including Rs2.4 billion for merged areas and Rs85.8 billion for settled districts while a record Rs19.9 billion is to be obtained from the federal government PSDP.

The salaries of government employees are being increased by 37% including a 20% increase in Functional or Sectoral Allowance, 10% increase in Adhoc Relief Allowance, and 7% in house rent for those employees who do not benefit from government’s accommodation scheme.

Jhagra said a 100% increase in pension expenditure has been witnessed in the last couple of years and the share of pensions, which was only 1% in 2003-04, had jumped to a record 13.8 percent of the total budget in 2021-22.

To overcome pension expenses, he said two proposals including an increase in the upper age limit of govt employees ie 55 years for early retirement or completion of 25 years of service were under consideration that would save Rs12 billion per year.

Similarly, Rs1 billion per year would be saved from a change in the pension rules under which widows, children, and parents of deceased employees would be entitled to pension benefits. The minister announced that minimum wages of laborers and daily wagers were being increased to Rs21,000.

Presenting the budget, Jhagra said that an amount of Rs23 billion has been allocated for the health insurance scheme.

Talking about the government’s achievements in 2020-21, he said that more than 7 million households can now receive free healthcare system in 35 districts of the province.

He said that KPK has become the first province to roll out comprehensive health coverage for every citizen.

While talking about economic achievements, he said that the province has attracted 50 million dollars of foreign investment by providing gas and electricity to Rashakai Economic Zone.

The budget also allocates funds to construct, rehabilitate and upgrade over 2,100 schools to increase enrollment capacity.


Balochistan approves budget for FY22 after protests delay proceedings

  • Session started hours after scheduled time due to protest by opposition
  • Health allocated 23% higher amount, education receives negligible increase
Updated 18 Jun, 2021

The Balochistan government approved on Friday the budget for fiscal year 2021-22 in a meeting chaired by Chief Minister Jam Kamal Khan, after protests and chaos outside the assembly delayed the start of proceedings by at least two hours.

An amount of Rs346.9 billion has been marked as non-development expenditure, while development expenditure will stand at Rs237.2 billion, up from Rs156.5 billion in 2020-21. Foreign project assistance has been estimated at Rs16.7 billion, up from Rs12.2 billion in 2020-21.

Additional Chief Secretary Planning and Development Hafiz Abdul Basit also briefed the meeting about the proposed Annual Development Program.

Finance Secretary Pasand Khan Buledi gave a separate detailed briefing to the cabinet about budget estimates, revenue and expenditure and financial discipline

The chief minister said all relevant stakeholders were consulted in the preparation of the budget, adding that his government will ensure financial discipline in the next financial year.

"The first priority of my government is to increase revenue for betterment of the province," he added.

An amount of Rs71.9 billion has been announced to be allocated to the education sector, a negligible increase over 2020-21, while health would be given Rs38.53 billion, 23% higher than the amount budgeted for 2020-21, in the next fiscal year. A 100% increase in allocation was witnessed for Social Protection initiatives, as the Balochistan government decided to put aside Rs10.8 billion, up from Rs5.3 billion in FY21.

Protests by opposition

Earlier, in what has become the norm this year, the budget session of the Balochistan Assembly started at least two hours late, amid protests by opposition lawmakers over what they claimed was an unjust distribution of funds.

Opposition lawmakers had blocked roads leading to the assembly premises in an effort to stop the government from presenting the provincial budget for the new fiscal year.

The budget session, scheduled for 4 pm, could not start as opposition members locked all gates in an attempt to prevent administrative officials from entering the hall.

Meanwhile, police baton-charged opposition members outside the assembly building. A police-armored personnel carrier (APC) also crashed into the gate of the MPAs' Hostel as it tried to clear the entry point of the building.

Following the administration’s successful negotiations with the opposition, the assembly’s gates were opened.

The budget session began under the chair of Speaker Abdul Qudoos Bizenjo. An opposition lawmaker, Nasrullah Zehray, accused the police of using violent methods to disperse the protesters outside the assembly. 

Sana Baloch, another MPA, criticised the government, saying that the “province was at its worst state”.

The opposition members, comprising lawmakers from several parties, have been protesting for four days over the alleged neglect of their constituencies in the budget.

Leader of the opposition, Malik Sikandar Hayat, said the government "did not take us into confidence regarding the budget and their four-day protest was not taken seriously".

"Today, we were forced to close the gate," he said.

On the other hand, Balochistan government spokesman Liaquat Shahwani said opposition members have crossed all boundaries of morality, and taken the assembly hostage. "The sanctity of the assembly has been violated by immoral acts," Shahwani said.

A day earlier, supporters of opposition parties blocked national highways in several cities of Balochistan, including Quetta, Chagai, Washuk, Kharan, and Nushki.

Opposition lawmakers had also announced that they would not let the provincial government present the budget on Friday.


Bilawal stresses on NFC Award, calls federal budget 'illegal'

  • If the economy has improved, then the government should immediately opt out of the IMF's deal: PPP chairman
  • Reacting to Bilawal's speech, energy minister Hammad Azhar challenges opposition to stay in the House and listen to the truth
Updated 18 Jun, 2021

(Karachi) Pakistan Peoples Party (PPP) Chairman Bilawal Bhutto Zardari has termed the budget session as 'illegal', saying the government is playing the role of the opposition instead of running the government.

Addressing on Friday the National Assembly session about the recently presented budget, Bilawal said that the government has compared Pakistan to the state of Madina, which is not appropriate.

Questioning the PTI’s ability to run the government, he said that seems the ruling party is playing the role of the opposition instead of a party in power.

Shehbaz comes down hard on govt's budgets

He maintained that people are well aware of the fact that the government's claim of achieving 4 percent economic growth is not true. Bilawal asked if the country has seen economic growth, as claimed by the PTI-led government, then why does it have to beg before the International Monetary Fund (IMF)?

"If the economy has significantly improved, then the government should immediately opt out of the IMF's deal," he said. "I think both this budget and the budget session are illegal," he remarked.

The PPP chairman stated that the PTI government has failed to give the National Finance Commission (NFC) Award to the provinces, which is meant to distribute financial resources between the federal government and the provinces.

"Every budget will be unconstitutional until the NFC Award is given," said Bilawal.

Regarding inflation, Bilawal said that the PTI government has made the lives of the people miserable and put them in destitute conditions.

"The government has pushed the people below the poverty line and they will never forgive it," he said.

Salient features of Budget

He highlighted that the government has raised the prices of petrol, gas, and electricity in the budget, putting the burden on the common man.

"If the budget raises petrol, gas, and electricity prices, then every Pakistani has to bear the burden of the government's incompetence," said Bilawal.

"The prime minister had promised to grant 10 million jobs to people, but on the contrary, even those who were previously employed have now been rendered jobless," the PPP chairman said.

Acknowledging that there had been inflation during PPP's tenure, he said the difference between our government and PTI's government is that we had not abandoned the people.

"We introduced the revolutionary Benazir Income Support Programme (BISP) but this government, on the other hand, harps on about the Ehsaas [programme], when you have no realisation [of the people's predicament]."

Criticizing the government's relief for the construction and real estate sector in the budget, Bilawal said the government had given an “ NRO [amnesty]” to these sectors.

“If this budget offers any relief, it is for the rich,” he added.

Azhar reacts to Bilawal's speech

Giving his reaction over Bilawal's speech, Federal Minister for Energy Hammad Azhar challenged that if the opposition is brave enough to listen to the truth then they should stay in the House till the end.

He criticised Bilawal for switching between English and Urdu during his speech, saying English skills are not enough to remove the stains of corruption from someone's character.

He stated that the PPP chairman delivered an immature speech on the budget and economic policies.

He asked the opposition to go through the budget documents once again and point out what taxes, as they claim, have been levied in Azad Jammu and Kashmir.

Azhar said that the rate of inflation was higher during the tenure of the PPP government, adding that it was the PPP that went to the IMF more than any other government in the past.


Shehbaz comes down hard on govt's budgets

  • After finally being able to deliver his speech, leader of opposition criticises govt for its 'fake' budgets
  • Previous three National Assembly sessions were adjourned due to 'disorderly' behaviour
Updated 17 Jun, 2021

(Karachi) Leader of the Opposition in the National Assembly Shehbaz Sharif came down hard on the government for its budgets, saying that 20 million people have been pushed below the poverty line due to the rulers' negligence.

After being sidelined for three sessions amid ruckus in the National Assembly, Shehbaz took the chance to give his two cents on the government's recently-announced budget for fiscal year 2021-22.

Hunger, inflation on the rise

Criticising the PTI government, Shehbaz said that in the last three years several taxes have been imposed on the poor that have resulted in millions being pushed below the poverty line. He added that there is hopelessness in the country due to previous budget announcements, adding that the upcoming one would also further increase inflation.

He stated that 20 million people have fallen below the poverty line in the last three years while the income of the people has been reduced by 20 percent. "People are asking where are the 10.5 million jobs promised by the PTI. As a result of these fake budgets, 5 million people have lost their jobs."

Shehbaz maintained that 15 percent unemployment and 16 percent inflation convey a grim situation. "They say we will create Naya Pakistan. It is obvious that the old Pakistan was better when the country was somehow made to progress," he said.

"There are unprecedented differences between the provinces. If the government only develops Punjab and leaves out the rest of the provinces, then this is not development," the opposition leader said. "If only Punjab progresses and the rest of Pakistan does not, then it is not progress," he emphasised.

Revenge from opposition

He highlighted that the government devoted all its energy to take revenge from the opposition instead of pursuing accountability. "The Opposition has been subjected to the worst kind of revenge," he remarked.

He lamented that PPP's Khurshid Shah, his son, and PML-N's Khawaja Asif remain behind bars to date.

Shehbaz said nobody is against accountability but it should be done fairly.

Covid pandemic

Shehbaz also criticised the PTI government's response to the Covid-19 pandemic.

The Rs1.2 trillion package to deal with the coronavirus that was announced by the government also fell victim to incompetence and negligence, the PML-N leader said.

Break begging bowl

The PML-N leader said per-capita debt in Pakistan has risen to 0.14m, adding that "every last hair of our coming generations is mortgaged."

"Can any nation remain alive like this — with an atomic bomb on the one hand and a begging bowl on the other?" he asked.

Shehbaz stressed that the country would have to generate resources, saying, "If we want to end dictation, then we will have to break the begging bowl."

He questioned what the government had done to increase exports in the last three years. "The rupee has fallen 35 percent against the dollar. When the value dropped, imports became expensive. Our exports could not increase since 2018. The PTI government could not increase exports in three years."

He claimed that the government had increased fiscal deficit by Rs10tr in the last years. "What did they do in three years? Did they build any hospital or university or technical institute or LNG storage?"

He added that people would "laugh" if he gave them examples of how the PTI government has set up signboards and ended projects started during PML-N's tenure.

The opposition leader said Finance Minister Shaukat Tarin claims the country's economy is growing, but despite that, wheat prices have gone up.

Shahbaz said 1.1 million tonnes of sugar were exported with the prime minister's approval, and a subsidy worth billions of rupees was given on it.

Business & Finance

Post-budget press conference: Murad says attention given to poverty alleviation

  • Sindh presented Rs1.477 trillion budget for financial year 2021-22 on Tuesday
16 Jun, 2021

Addressing the post -budget conference on Wednesday, Chief Minister Murad Ali Shah said that the provincial government has given special attention to poverty alleviation.

He said 20% salaries of government employees have been increased in the province.

Expressing concern over the coronavirus pandemic, CM Murad said that the province is facing issues regarding vaccine supply. He urged the federal government to take responsibility and solve this issue.

The Sindh government Tuesday presented Rs1.477 trillion budget for financial year 2021-22 with estimated deficit of Rs25.738 billion. The provincial government did not introduce any new tax in the budget, and proposed 20% increase in the salaries of government employees and 10% raise in pensions. The Sindh government also proposed the minimum wage at Rs25,000 against the existing Rs17,500, in the new fiscal year.

Talking about provincial taxes, Chief Minister Sindh said that Rs329 billion have been allocated for total tax and nontax receipts. “We believe that the Sindh Revenue Board will be our biggest revenue source and we have set a target of Rs150 billion for the next financial year."

He said that provincial government has set a target of Rs120 billion for excise and taxation department for the next financial year. The collection target for the Board of Revenue Department has been earmarked at Rs30.64 billion.

CM Murad said Rs24 billion has earmarked to be collected under nontax revenue including home department receipts, chalan and fees.

He said the receipts on account of foreign project assistance, budgetary support loans and grants were estimated at Rs71 billon.

Coming to the expenditure side, CM Murad said that a major portion of the total budget outlay comes into the current revenue expenditure head, also called the non-development expenditure.

“This includes salaries and pensions and funds given to the local government, which for this year has been allocated at Rs82 billion,” said CM.

Other major recipients of this expenditure are the grants given to major institutions including both government and private institutions, he said.

“Rs6.5 billion will be given in grants to public sector universities, Rs2 billion grant for SSC and HSC students, Rs14 billion has been allocated for NICVD, Rs7.1 billion for SIUT and Rs8.2 billion grant for PPHI,” he said.

For current capital expenditure, which includes repayments of loans and funds for private partnerships projects, Rs59.5 billion has been allocated.

He said that a poverty alleviation programme for small business is being initiated under which loans between Rs200,000 and 500,000 would be given for which Rs2 billion has been earmarked.

Similarly, for small farmers Rs200,000 will be given as loans, and Rs3 billion has been allocated for this purpose. For small technology-based startups, the provincial government has earmarked Rs1 billion.

Business & Finance

Federal budget pro-growth but food inflation remains concern, says think tank

  • PRIME Institute calls for sustainable growth measures including increasing real incomes, employment
Updated 16 Jun, 2021

PRIME Institute has termed Pakistan's federal budget for fiscal year 2021-22 pro-growth, but added that economic gains could be wasted if inflation rises.

In its post-budget comments, PRIME, an Islamabad-based think tank, said that the federal budget strategy for FY22 is pro-growth and spending-led. The latest budget has called for a reduction in existing indirect taxes with no new direct tax on salaried class and businesses.

"However, the gains from higher growth rate can be wasted in the case of increased food inflation," stated PRIME.

It commented that if international oil prices do not come down, a possible hike in petroleum levy is likely to result in cost-push domestic inflation.

Budget speech 2021-22

The federal government on Friday announced its third budget in an attempt to generate stimulus and offer enough incentives that would help it reach a growth target of 4.8%. The government total budget outlay was set at Rs8,487 billion, while the national PSDP outlay at Rs2,102 billion.

The report pointed out that the budget FY22 entails increase in power subsidies but not food subsidies.

Commenting on the budget, PRIME Executive Director Ali Salman said that “the government has presented a pro-growth budget by tax cuts and demonstrating fiscal prudence, though some of the additional indirect taxes on key commodities will backfire.” He also said that the budget sanctity has to be ensured and hoped that no mini-budgets are introduced in the next fiscal year.

Salient features of Budget 2021-22

PRIME report says the government’s commitment to improved recoveries from state-owned enterprises as well as higher targets from privatisation proceeds is appreciable. "This is high time that the government delivers on its promises of turning around loss-making public sector enterprises."

The report highlighted that contrary to the claims of being a pro-poor budget, ambiguity remains as to how this budget will reduce food inflation in the upcoming fiscal year.

Under the federal budget FY22, the government has proposed to increase the turnover tax on wheat from 0.25 percent to 1.25 percent, while sales tax on flour bran is set to enhance from 7 percent to 17 percent. Moreover, Rs7 billion would also be collected from sales tax on sugar. “Since both are essential commodities, increase in their prices is likely to worsen food inflation,” said the report.

It said that the direct and indirect cash transfers to low-income group through the Ehsaas programme is a short-term solution for mitigating the effects of food inflation and other socio-economic issues, which this budget entails. “However, a long-term and a more sustainable approach calls for increasing real incomes, employment opportunities, human capital development and sustaining economic growth in order to achieve a definite improvement in socio-economic indicators,” it said.


Rs1.48trn Sindh budget proposes Rs25,000 minimum wage

Updated 16 Jun, 2021

KARACHI: The Sindh government Tuesday presented Rs1.477 trillion budget for financial year 2021-22 with estimated deficit of Rs25.738 billion.

Sindh government didn’t introduce any new tax in the budget whereas it proposed 20 percent increase in the salaries of government employees and 10 percent raise in pensions. Provincial government also proposed the minimum wage at Rs25,000 against the existing Rs17,500, in the new fiscal year.

Terming it a ‘citizens budget,’ Sindh Chief Minister Syed Murad Ali Shah amidst the uproar by opposition parties, announced that total budget outlay for Financial Year 2021-22 is estimated at Rs1.477 trillion against budget estimate of Rs1.241 trillion for current FY, showing overall increase of 19 percent.

Current expenditure of the province has been projected at Rs.1.14 trillion, which includes current revenue expenditure of Rs.1.089 trillion and current capital expenditure of Rs.59.49 billion in the budget. “This is 78% of total expenditure of the province and shows an increase of 14% over estimates of Rs.1 trillion for last year,” Shah said.

The CM highlighted that for the next financial year government tried to align development as well as non-development expenditure priorities in line with the post-Covid situation.

The development expenditure of the province in the budget has been proposed at Rs.329.032 billion, which include Rs.222.5 billion for Provincial ADP and Rs.30.0 billion for Districts ADP, foreign project assistance of Rs.71.16 billion and Rs.5.4 billion from Federal PSDP Grant for schemes being executed by Government of Sindh.

Murad said that in FY 2021-22, 1,033 schemes have been identified for completion in first and second quarter and maximum resources will be provided for their timely completion. On-Going schemes with remaining throw-forward up to Rs100 million have been fully funded for completion by June, 2022. On-Going Schemes where 70% expenditure is made have been fully funded for completion by June, 2022. Murad announced that total revenue of the province has been estimated at Rs1452.168 billion whereas the budget outlay was Rs1477.903 billion.

The Chief Minister said that a 20% increase had been proposed for the government employees and a 10% raise in pensions of retired government workers had been proposed. He said the minimum salary of the laborers would be increased from Rs17,500 to Rs25,000.

Chief minister said that health remains a priority sector and after advent of Covid-19, Government reprioritized its allocation and earmarked maximum resources in 2020-21 for prevention, isolation, and treatment for Covid-19; besides, significant resources were also spent containing and mitigating the economic damage due to job loss and business closure. For the next financial year, an allocation of Rs.172 billion is proposed as against an allocation of Rs.132.88 billion in 2020-21.

The budget for the education in next budget has been proposed Rs.277.5 billion against Rs.244.5 billion in the current fiscal.

The Chief Minister announced that as part of pro-poor and sustainable development measures, a social protection and economic sustainability package of Rs.30.9 billion has been proposed for the next financial year 2021-22.

Murad Shah announced that budget estimates for current revenue expenditure of Energy Department are estimated at 23.26 billion, which includes Rs.21 billion for clearance of outstanding liabilities of electricity dues of various government departments pertaining to DISCOs such as KE, Hesco and Sepco.

He said that In order to exploit on Thar coal potential, Sindh has requested federal Government to consider progressing on Kati Bandar Project and laying a railway line from Islamkot to Mirpurkhas for coal logistics. The two approaches are essential as industrial expansion in Thar is challenged by extreme weather conditions and water availability.

The Chief Minister said that during the current financial year Rs78 billion are earmarked for local councils in Sindh. For the next financial year allocation of Rs82 billion has been proposed.

He stated that Government of Sindh provided Rs4.02 billion as relief grant and for distribution of compensation to the victims of monsoon during CFY. For 2021-22, an allocation of Rs500 million has been kept for various relief measures.

Shah announced that the Finance Department is working on various Public Financial Management (PFM) and Public Sector Reforms with the assistance of donor partners, ie, the World Bank and European Union. PFM is a cross-cutting theme that can positively impact the fiscal discipline, public service delivery and economic development. Reforming this critical area has a gross positive impact on governance on multiple accounts.

Murad Ali Shah pointed out that actual transfers to Government of Sindh in a fiscal year always fall short of the estimates provided, as FBR falls short in collection of its set targets. The Federal Government is the major contributor to Sindh’s finances comprising of 72.5% in its entirety. It is a fact that these shares inevitably fall short of the estimates we provide every year.

As a result, our development expenditure has to be adjusted to offset the effect, Shah stated and desired to work in close coordination with the Federal Government in the larger interest of the people of Pakistan to overcome these issues. “We expect that the Federal Government would also support us in all our endeavors and help to come up with viable solutions to the issues being faced by Sindh,” he stated.

Copyright Business Recorder, 2021


Sindh announces Rs1.48 trillion budget for FY22

  • Chief Minister Syed Murad Ali Shah, who also holds portfolio of finance minister, starts budget speech amid ruckus from opposition
  • Says provincial govt aims to create over 2,500 jobs in upcoming fiscal year
Updated 15 Jun, 2021

Sindh announced the budget for fiscal year 2021-22 with an estimated outlay of Rs1.48 trillion, with Chief Minister Syed Murad Ali Shah's speech drowned in noise by opposition benches as the tradition to disrupt budget announcements continued.

The current expenditure of the province is estimated at Rs1.14 trillion, while the development component is projected to be Rs329 billion, which includes Rs222.5 billion of the provincial ADP, Rs30 billion for district ADP, foreign project assistance at Rs71 billion and Rs5.4 billion in Federal PSDP grants.

He said that in the upcoming fiscal year, the provincial government intends to create 2,600 jobs, and aims to complete 1,033 schemes.

The chief minister, who also holds the portfolio of Sindh finance minister, said the budget is ‘pro-people’, but the coronavirus pandemic has fundamentally altered way of life.

Talking about the health sector, CM Murad said funds to the tune of Rs24.7 billion have been allocated specifically to deal with the coronavirus pandemic. "Over 960 new posts will be created at different levels of health management," said Murad.

An amount of Rs18.3 billion has been proposed for the purchase of drugs and medicines while Rs2 billion is being allocated to purchase PCR testing kits.

Moving to education, CM Murad said this is the single most important factor that contributes to the development of a country. "The provincial government has allocated Rs277.5 billion, up from the current Rs244.5 billion. The provincial government has increase ADP allocation for education sector to Rs26 billion."

An amount of Rs1.2 billion has also been allocated for scholarships to students securing highest grades in SSC, HSC educational boards of Sindh, he said.

Hitting out at the federal government, he said that out of the total transfers of Rs760 billion, Sindh has actually received Rs617 billion to date.

Sindh government at loggerheads with federal

Earlier on Monday, CM Murad said the Pakistan Peoples Party (PPP)-led provincial government has been at loggerheads with the centre over federal transfers.

"We are facing a shortfall of Rs82 billion in federal transfers, therefore our entire budgetary commitments have been affected ," Murad had said in a presser.

The CM said that the FBR has shown a growth of 17% during the last three years, but the Sindh Revenue Board (SRB) has shown a growth of 21%. "Our growth rate is four percentage points higher than the FBR's," he said, adding that he was criticising the performance of the FBR because its failure to achieve targets affected the provincial share in the revenue.

Murad Ali Shah said that the Sindh government was told that it would be given Rs742 billion from divisible pool and straight transfers and we had framed our budget accordingly. At the end of day, the federal government revised Sindh government share from Rs742 billion to Rs680 billion that caused a Rs62 billion shortfall just in revision. He added that during the last 11 months, the Sindh government was faced with Rs82.5 billion shortfall of its share.


Punjab follows in the footsteps of centre

• Rs2.653trn budget presented • Development outlay raised by record 66pc; Rs560bn reserved for ADP; Rs405bn tax...
Updated 15 Jun, 2021

• Rs2.653trn budget presented

• Development outlay raised by record 66pc; Rs560bn reserved for ADP; Rs405bn tax collection target set

LAHORE: The Punjab government on Monday presented the budget for the fiscal year 2021-22 with an estimated outlay of Rs 2,653 billion which is 18 percent more than the current fiscal year’s budget and includes an Annual Development Programme (ADP) worth Rs560 billion.

The budget session was the maiden one in the newly-constructed building of Punjab Assembly. Punjab Finance Minister Hashim Jawan Bakht presented the budget. The government expected to get Rs 5,829 billion from federal Divisible Pool and is expected to get Rs 1,684 billion from the National Finance Commission Award which is 18 percent more than the current fiscal year’s allocation.

In his speech, Hashim said a target of Rs 405 billion had been set for provincial tax collection which is 28 percent more than the current fiscal year. The current expenditure estimates in the budget is around Rs 1,428 billion. The government has increased the development budget by 66 percent which shows that it is committed to bringing economic prosperity in the province. He said the government allocated Rs 189 billion for the South Punjab which is 34 percent of the total annual development budget of Punjab. The government has allocated Rs 12 billion for the development of industrial sector and more than Rs 28 billion for Lahore considering its importance as a business hub, he added.

He also said that health and education sector is the priority of the government as it has allocated Rs 370 billion for health sector. The government has allocated Rs 96 billion for development budget of health sector which is 182 % more than more than current fiscal year and it is initiating universal health insurance program with the allocation of Rs 82 billion. Under this program, 100% population of Punjab will get free and quality health services. It is expected that government will issue health cards to 110 million people of the province.

Moreover, the minister said, the government has allocated Rs 442 billion for the education sector which is Rs 51 billion more than the current year and more than Rs 54 billion has been earmarked for the development budget while Rs 388 billion has been allocated for the current expenditure. More than Rs 6 for the upgradation of schools and Rs 23 billion for the schools run by Punjab Education Foundation and Punjab Education Initiative Management Authority billion has been reserved. The government has allocated Rs 15 billion for higher education which is 285% more than the current fiscal year.

In order to ensure food security and increase agricultural productivity, the minister added, the government has made a whopping increase of over 300% in the agriculture development projects. It allocated more than Rs31 billion for the agriculture transformation and Rs 100 billion for Agriculture Transmission Plan. Moreover, Rs 55 billion has been set aside for the irrigation sector.

For livestock and dairy development projects, Rs5 billion have been allocated, and for the improvement of watercourses, Rs5 billion have been earmarked. For environmental protection, an allocation of Rs4 billion has been made, out of which Rs2.5 billion will go to the Prime Minister's flagship 10 billion tree tsunami project.

The government has earmarked Rs 380 billion for construction, repair and expansion of roads in the province. In order to provide relief to the tax payers and revival of business, the government has proposed tax concessions of Rs 50 billion. There will be no change in the rate of stamp duty and it will remain 1% only. The ratio of sales tax on services will remain 5%. The government has proposed reduction of tax ratio on call centers from 19 % to 16 %. The government has also proposed a 10% increase in salaries and pension of provincial employees besides increasing the minimum wage of workers from Rs17,500 to Rs20,000.

Earlier, Chief Minister Punjab Sardar Usman Buzdar chaired a cabinet meeting to approve budgetary proposals for the financial year 2021-22. The finance secretary briefed about the budget details while chairman P&D apprised the participants about the salient features of the ADP.

The cabinet also approved the supplementary budget of 2020-21 along with the approval of revised estimates of the current budget 2020-21. Finance bill 2021 was also approved by the meeting and the cabinet approved a ten per cent increase in salaries and pensions of provincial government employees. The CM and the cabinet, however, unanimously rejected the proposal of the Board of Revenue to enhance the agriculture tax.

Addressing the meeting, the CM emphasized that the peasants will not be burdened, adding that the farming community will be made more prosperous by the PTI government. He appreciated that the cabinet has enhanced the minimum wage of workers from Rs.17,500 to Rs.20,000 and congratulated the finance minister, Advisor Dr Salman Shah, Chief Secretary, Chairman P&D, secretary finance and others for the balanced budget.

A record increase has been made in the development budget for the first time, he said. A separate development package has been devised for every district and realistic targets have been identified to facilitate the common man, he emphasized. The priorities have been identified according to the basic needs of the people, he continued. This budget is not a jugglery of words but a document of balanced development, the CM stated. A continuous liaison will be maintained with parliamentarians during the budget session, he further said.

The CM said inefficient opposition is only meant for making hue and cry at every occasion and advised it to avoid indulging in criticizing every good work done by the government. It also caused uproar in the corona pandemic while leaving the people in the lurch, the CM regretted.

The meeting endorsed the decisions of the 57th and 58th meetings of the cabinet standing committee for finance and development along with the decisions made in the 60th, 61st and 62nd meetings of the cabinet standing committee for legislation.

Copyright Business Recorder, 2021


What some of the budget measures mean

  • Business Recorder helps break down some of the proposals that may impact you
12 Jun, 2021

When all is said and done, not every budget measure impacts everyone directly. But almost all of them have a trickle-down effect on every Pakistani. Here are Business Recorder’s picks of some features of Budget 2021-22 that have stood out at first glance, and are apart from the usual allocation numbers.

- Federal excise duty proposed on internet data usage at Rs5 per GB.

Many have criticised the proposal, and it is likely to be removed before the budget is implemented from 1 July.

- No change in tax rates for salaried class individuals.

Contrary to earlier belief that the salaried class will get a ‘relief’, they have to be satisfied with having no new taxes imposed on their monthly incomes.

- Removes WHT on bank transactions.

This comes as a positive for filers of income tax returns, and is likely to help traders and businesspersons.

- Federal excise duty to be removed from small cars with engine capacity up to 850cc. Reduced rate of sales tax at 1% on local supply of electric vehicles.

This is likely to bring the prices of small cars down. In the case of electric vehicles, we will have to wait and watch when Pakistan starts producing them locally.

- Tax on the so-called ón’ money on vehicles, if vehicle is disposed without registration, is to be retained.

This proposal is not going to sit down well with car dealers who rely on early deliveries to make a profit.

- Reduction in threshold of monthly electricity bill for withholding tax on electricity consumption from 75,000 to 25,000 from domestic users not appearing on Active Taxpayers’ list.

If you are a non-filer, and your electricity bill is Rs25,000 or more, then bad news for you. This measure is meant to serve as a punishment for non-filers.

- Reduction in tax rate on capital gain tax on disposal of securities from 15% to 12.5%.

One of the most keenly-awaited measure for stock market investors, and is likely to give a boost to the KSE-100 Index.

- Reduction in tax liability by 25% for women entrepreneurs.

This is being seen as a positive for women's inclusion in the formal sector.

- Exemption from tax on import of books and agriculture equipment.

Good news for those who want to read books, and import agricultural equipment. We wonder why the two exemptions were clubbed together in one sentence.

- Removal of requirement of updating tax profile.

This requirement, when first introduced, drew a lot of criticism. However, all you needed to do was update your profile on the FBR website, just like you would on a social media page. Nonetheless, it has been removed.

- Deletion of withholding tax on domestic & international air travel.

This is likely to bring the cost of travel down. How much of it is passed on by the airline to the consumer is another matter.

Business & Finance

Pakistan eyeing sustainable growth, says Tarin

  • Focus to stay on protecting the most vulnerable and increasing dollar revenue
  • Addressing post-budget press conference, finance minister says measures aimed at broadening tax base
Updated 12 Jun, 2021

Finance Minister Shaukat Tarin has said that an additional tax of Rs500 billion will be collected for the next financial year, as the government seeks to achieve sustainable growth.

Sitting alongside the government’s economic team including Minister for Economic Affairs Khusro Bakhtyar and Commerce Adviser Razak Dawood, Tarin addressed the post budget conference on Saturday. "We have presented a total growth budget and our challenge is to achieve sustainable growth,” said Tarin.

The target is to take the growth rate to 20% in 8 to 10 years, said Tarin.

Under the budget unveiled on Friday, the government has taken measures of around Rs506 billion, including taxation measures of Rs264 billion and enforcement measures of Rs242 billion to meet the annual target of Rs5,829 billion.

The measures include 17% sales tax on crude oil, Federal Excise Duty (FED) on phone calls/SMS messages/internet data usage, 17% sales tax on silver/gold jewellery, and 7.5% withholding tax on monthly electricity bill of above Rs25,000 of domestic users not appearing on the Active Taxpayers' List.

Addressing the press conference, Tarin said that the country needs to earn dollars, which can only be achieved by increasing exports.

The finance minister said the government intends to broaden its tax base as well. “We are in dialogue with the IMF on this issue, as we want to broaden the tax base and not impose further taxes on the taxpayer,” he said.

He said the government has set up a tax collection target of Rs5.8 trillion for the next fiscal year which will be achieved through innovative approach including the use of latest technology.

Pakistan targets 4.8% GDP growth in upcoming fiscal year

Targeting the retail sector, he said that large retailers have sales of Rs1,500 billion, and sales tax has to be levied on all big stores. “I have figures from independent sources. Large- and middle-tier retailers have sales of Rs1.5 trillion.”

The finance minister said that consumers will be rewarded if they get a sales receipt. He said such schemes have been successfully implemented in Turkey and other countries.

The ex-banker said that after much deliberation it was understood that the resources to be distributed to the poor are in the banking sector. “The government does not have the fiscal space to disburse Rs 600-700 billion every year,” he said.

The finance minister said that in order to benefit the masses, four million households, to be accessed through the Ehsaas Survey, will be provided with interest-free business and farming loans. Besides, they will be given health cards and one member of each family will be imparted technical training.

Highlighting the measures taken in the Budget 2021-22, Tarin said taxes on the IT sector have been rationalized in order to exploit its full potential.

Tarin said duties have been abolished on almost all the raw materials, which will strengthen the local industries and reduce imports.

Talking about reducing taxes on automobile sector, the finance minister expressed confidence that the prices of cars with engine capacity of up to 850 cc will come down.

The government on Friday announced exemption from FED on motor vehicles up to 850 cc and reduced sales tax from 17% to 12.5% in addition to withdrawing value-added tax (3%) on motor vehicles up to 850 cc.

Tarin said the incentives given to the SMEs will also help achieve higher growth in the industry.

Talking about the power sector, Tarin said the government has increased subsidies to bring efficiency. “DISCOs will be operated through independent boards and they will be privatized, while line losses will be reduced and recoveries will be enhanced.”

Salient features of Budget 2021-22

Finance minister said that the prime minister and the cabinet had opposed the imposition of tax on mobile calls, internet data and SMS after which all of them would not be taxed.

The Federal Minister said that increase in agricultural production is essential to control prices and the government will introduce integrated systems to protect farmers from exploitation.

Tarin, on Friday, presented a Rs8.495 trillion spending-led outlay for fiscal year 2021-22 designed to achieve six to seven percent GDP growth in the next two to three years.

In his budget speech, he came down hard on the economic policies of the previous governments, and stated that Prime Minister Imran Khan helped the country avert a default and put it back on the path of economic growth.


Growth-focused budget: IMF acquiescence, not consent?

12 Jun, 2021

• Rs8.49trn FY22 outlay is based on 4.8pc growth target and increased spending on public sector development

• Ad hoc relief of 10 percent raise in basic pay and pensions of the federal government employees announced

ISLAMABAD: Finance Minister Shuakat Tarin, on Friday, presented a Rs8.495 trillion spending-led outlay for the fiscal year 2021-22 designed to achieve six to seven percent GDP growth in next two to three years 4.8 percent for FY2021-22 by facilitating auto, telecom, agriculture as well small and medium enterprises for job creation amid roaring protest from the opposition.

The finance minister, in his budget speech, came down hard on the economic policies of the previous governments, and stated that Prime Minister Imran Khan helped the country avert a default and put it back on economic growth of 3.4 percent in the outgoing (current) fiscal year.

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The finance minister said that a 40 percent increase on development outlay to Rs900 billion from Rs650 billion for the current fiscal year would pave the way for much-needed growth.

Gross revenue for the next fiscal year has been estimated at Rs7,909 billion, higher by 24 percent over Rs6,395 billion for the current fiscal year, and the Federal Board of Revenue (FBR) tax collection at Rs5,829 billion for 2021-22 from Rs4,691 billion for the current fiscal year.

Provinces' share has been estimated at Rs3,411 billion, Rs707 billion higher over allocation for current fiscal year, and the federal government's share after transferring provinces' share in the tax collection would be at Rs4,497 billion, while a 22 percent increase in non-tax revenue.

The expenditures are estimated at Rs8,495 billion against Rs7,341 billion for the outgoing fiscal year, up by 15 percent and subsides have been allocated at Rs682 billion. The GDP growth target for the next fiscal year is projected at 4.8 percent.

The government has allowed 10 percent ad hoc relief allowance to all federal government employees from 1 July 2021 and 10 percent increase in pension to all pensioners increased in orderly allowance from Rs14,000 to Rs17,500 besides increase in minimum wage to Rs20,000.

Fiscal deficit is projected at 6.3 percent against the revised target of 7.3 percent for the current fiscal year, and primary deficit target is 0.7 percent. The government has reduced the primary deficit to 3.2 percent in three years from 3.7 percent in 2018-19.

Tarin said that the government wanted to restructure the tax regime and as a first step self-assessment scheme would be restored in actual shape.

Tax on income and expenditure would be primary instruments and information technology would be used to broaden the tax base.

The minister asked the rich to pay their due taxes and announced that exemption in terms of professions would be withdrawn.

No new tax would be imposed on salaried class and trace and track initially implemented in four industries would be gradually expanded to the other sectors, he said, adding that the government wants to increase GST net and entire wholesale and retail sector linked with the Federal Board of Revenue (FBR) would be brought into the tax net.

Pakistan single window is being launched, added the finance minister.

The finance minister said that minimum turnover threshold for cottage industry has been increased from Rs3 million to Rs10 million, local production of 850cc vehicles to be exempted from federal excise duty (FED) and sales tax is being reduced from 17 percent to 12.5 percent and value-added tax is being removed.

The minister said the export of IT sector would be provided zero-rating; for promotion of electric vehicles, sales tax on local production of CKD is being reduced from 17 percent to one percent and tax would be exempted on their export value addition.

There would be exemption of FED on four-wheel electric vehicle as well.

The minister said that there is exemption of tax on import of machinery and raw material for SEZs, and locally-constructed storage of agriculture products would be given tax exemption.

On telecom industry, the FED is proposed to be reduced from 17 percent to 16 percent.

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

The government has also proposed inclusion of sugar in the Third Schedule.

The minister said that 12 withholding taxes are being withdrawn from banking transactions, Pakistan Stock Exchange and margin financing, air travel service, international transactions through credit/debit cards, exploration of minerals. Withholding tax (WHT) on use of mobile phones would be reduced from 12.5 percent to 10 percent while WHT on different services - oil field services, warehouses and travel and tourism services - would be reduced from eight percent to three percent.

Disposable and CGT tax is proposed to be reduced and CGT would be reduced from 15 percent to 12.5 percent.

Turnover tax threshold for individuals and association is being increased to Rs100 million, and tax is being reduced from 1.5 percent to 1.25 percent.

He said that withholding tax on import of stationery books and agriculture products is being exempted.

There is proposal that block taxation in property tax should be removed and limit block tax on non-transferable property.

There is a proposal of special tax regime for SMEs and those who have turnover of Rs100 million would be required to pay tax at the rates of 0.25 percent or 7.5 percent of their income and those whose turnover is of over Rs100 million would be required to pay 1.5 percent of their turnover.

All services receipts should be taxed at one percent and IT-related exports are brought under the provision of 100 percent tax credit.

Turnover tax of SEZs was abolished, and under SEZA, zone developers and zone enterprises are being exempted from tax for a period of 10 years.

Tax on warehouses services, logistics services and platinum management is being reduced from eight percent to three percent.

He said that in the Finance Bill 2021, textile-related 164 tariff headings regulatory and custom duty have been removed.

The minister said that Prime Minister Imran Khan wanted to change the course of history and four to six million people low-income households would be protected through a bottom-up approach.

The government would disburse every household Rs0.5 million interest-free business loan, every farming household will be given Rs0.25 million interest-free farming loan, and Rs0.2 million interest-free loans for tractors and machineries besides low-interest housing loans of up to Rs2 million as well as Sehat Card and free technical training to one member of each family.

The finance minister said that Rs900 billion development budget for the next fiscal year would pave the way for development as its development priorities would be to ensure provision of water and energy security, infrastructure development, progress on CPEC implementation, development of SEZs and their operation, SDGs targets as well as measures against climate change.

These measures would help achieve sustainable development besides reducing poverty and unemployment.

The government would initiate national agriculture transformation plan to develop the agriculture and livestock on modern lines and Rs12 billion has been allocated in the budget for the next fiscal year.

Rs91 billion for water sector and completion of Diamer-Bhasha and Mohmand dam would be a priority of the government.

Rs57 billion has been allocated for Dasu hydropower and Rs23 billion for Diamer-Bhasha dam and Rs6 billion for Mohmand dam.

He said that Rs14 billion has been allocated for Neelum-Jhelum hydropower.

The government, he said, wants to expedite work on the China-Pakistan Economic Corridor (CPEC) and so far 17 big projects of $13 billion worth have been completed and 21 projects of $21 billion worth are being implemented besides 26 strategic-level projects (worth $28 billion) are in the process of planning. ML-I with a cost of $9.3 billion is being implemented in three packages and a first package has already started.

The government has allocated Rs118 billion in the budget for power transmission projects and secondary transmission line Hyderabad-Sukkur would also be constructed at Rs12. 5 billion, whereas Rs22 billion is allocated for production of 1200MW of electricity from coal at Jamshoro power project, and Rs15.5 billion has been allocated for K-1, K-2, and Tarbela hydro project expansion in the next fiscal year's budget.

The government has allocated Rs20 billion for southern Punjab development plan and would provide Rs98 billion in the PSDP for the Karachi transformation plan.

Gigit-Baltistan to get Rs40 billion, and KP for merged areas Rs54 billion. There have been allocations of Rs14 billion for Ten Billion Tsunami project and Rs118 billion for social sector and Rs100 billion for Covid-19 expenditure as well.

The government has also allocated Rs12 billion for SMEs support programme, Rs10 billion for Kamyab Jawan Programme, and Rs100 million for anti-rape fund.

The finance minister said that Rs66 billion is being allocated for the High Education Commission (HEC) and Rs44 billion for development budget.

Support to the export sector under various schemes would be continued and PIA and Pakistan Steel Mills would be provided Rs20 billion and Rs16 billion, respectively.

He said that for Kashmir Rs60 billion, Rs47billion for G-B have been allocated. Sindh would be provided Rs12 billion special grant while Balochistan would be provided additional Rs10 billion.

Copyright Business Recorder, 2021


Salient features of Budget 2021-22

  • Pakistan moves into the next fiscal year with a growth target of 4.8% in mind
  • Several proposals hailed as positive for economy
12 Jun, 2021

In an attempt to generate stimulus and offer enough incentives that would help it reach a growth target of 4.8%, the federal government unveiled its third budget on Friday.

Here are the salient features:

• GDP growth target has been set at 4.8%

• Total budget outlay set at Rs8,487 billion

• National PSDP outlay set at Rs2,102 billion

• Federal PSDP outlay set at Rs900 billion for FY22, up 43% year-on-year compared to Rs630 billion in FY21

• Large-scale manufacturing to grow by 6.0%

• Debt repayment to cost Rs3,060 billion

• Government sets NFC distribution target at Rs3,412 billion

• FBR's tax collection target set at Rs5.8 trillion for FY22 compared to PKR 4.7 trillion in FY21.

• An amount of Rs12 billion set aside for emergency agriculture program to ensure food security

• Total subsidy expenditure for FY22 stands at Rs682 billion

• No new tax implied on salaried class

• Minimum wage to be increased to Rs20,000

• Interest-free loans upto Rs500,000 to be provided to help alleviate poverty concerns

• Foreign auditors to be selected for E-audit system

• Karachi's transformation plan will be allocated Rs98 billion from the PSDP

• Reduction in rate of capital gains tax on disposal of securities from 15% to 12.5%

• Defence spending to be Rs1.37 trillion in the upcoming year

• Federal government employees' salaries and pensions would be increased by 10%

• Federal excise duty proposed on internet data usage at Rs5 per GB

• Tax on the so-called ón’ money on vehicles, if sold without registration, is to be retained

• Reduction in tax liability by 25% for women entrepreneurs.

• As per a brokerage house, the budget announcement is positive for the following sectors: Flat Steels (cut in HRC duties), Pharmaceuticals (cut in duties on import of APIs), IT (Zero Rating), Textiles/Consumers/Foods (reduction in duties) and Refineries (exemption on tax on BMR).

It was deemed neutral to positive for: Power (allocation of subsidy towards PHPL and IPPs), Banks (removal of WHT for non-filers), Cements and Rebar Steel (higher allocation for development expenditure) and Autos (reduction in duties on car below 850CC).

However, the an initial analysis suggested it is negative for telecom operators (higher taxes).

Business & Finance

KP business community terms Budget FY22 balanced

Updated 12 Jun, 2021

PESHAWAR: Business community here on Friday termed the federal budget for fiscal year 2021-22, as a 'balanced', 'growth-oriented' and 'pro-businesses', asking the government to implement 'relief initiatives' with true letter and spirit to revive covid-19 hurt national economy, businesses and industries.

Addressing a news conference after presentation of federal budget for FY 2021-22 here, president of Sarhad Chamber of Commerce and Industry Sherbaz Bilour said that the government has presented a 'growth-oriented' and 'business-friendly' budget for the next fiscal year, which can give boost to businesses and industrialization, and create jobs in the country.

He welcomed the abolishment of Federal Excise Duty (FED) from erstwhile Federally Administered Tribal Areas (Fata) and Provincial Administrative Tribal Areas (Pata).

The SCCI chief expressed the hope that the government's step will bring economic prosperity and development in the newly merged tribal districts and Pata.

SCCI vice president, Junaid Altaf, former FPCCI president Ghazanfar Bilour, former presidents Malik Niaz Ahmad, Faiz Muhammad Faizi, Riaz Arshad, executive members Muhammad Aurangzeb, Abdul Jalil Jan, Abidullah Yousafzai, Faiz Rasool, Saddar Gul, industrialists Association Hayatabad Peshawar president Malik Imran Ishaq, traders and industrialists were present during the presser.

Sherbaz Bilour hailed the reduction in excise duties, including on raw material, which is a welcoming step through the fiscal budget. He added the initiatives to boost up hydel power generation, abolishment of tax on online businesses, increase in loans for cottage industries from Rs3 Million to Rs 10 Million, are the good one to accelerate pace of economic development and address the key attached with relevant sectors.

The chamber president also appreciated abolishment of different 12 withholding taxes (WHTs). Similarly, he added the abolishment of the condition for up-gradation of tax profile is also a good step.

While responding to a question of reporters, Sherbaz Bilour said the unjust was being carried out with Khyber Pakhtunkhwa by the federal government in past years regarding payment of amounts Net Hydel Profit (NHP) along with arrears.

Copyright Business Recorder, 2021


17pc GST on sales via online marketplace

12 Jun, 2021

ISLAMABAD: The sales of goods through an online marketplace have been subjected to 17 percent sales tax by incorporating the same under the Sales Tax Act, 1990.

Through the Finance Bill (2021), the scope of sales tax is expanded to online sales using third-party platform.

Sharing sales tax revenue measures, sales tax expert Arshad Shehzad informed, presently, there was no specific provision of collecting sales tax on sales made from the online marketplace using third-party platform by tier-1 retailer. In recent years, the sales tax online platform has been increased remarkably.

The sales tax act; however, does not provide specific law and modus operandi for reporting and collection of sales tax through such channel.

In this budget, the amendment has been brought under Section 3 of the Act to expand the scope of sales tax on the supply of goods through the online marketplace.

Similarly, the definition of tier-1 retailer is also expanded to include a retailer operating an online marketplace supplying goods through the e-commerce platform, whether or not the goods are owned by him, Shehzad explained.

Explaining another measure, he informed sugar is included under the third schedule. By virtue of this amendment sales tax on sugar is now required to be paid at retail price. Additionally, this retail price is also required to be printed on packaging or sugar bags.

The supplies of sugar to pharmaceutical, beverage, and confectionery industries will remain excluded from the purview of the third schedule.

Commenting on this amendment, Shehzad pointed out an exclusion from the retail price on supplies to industries is a correct decision. However, the government has overlooked providing a mechanism for the application of this exclusion on imported sugar.

Shehzad informed that the imported fine sugar is generally used by the industries.

The commercial importers, importing crystallite fine sugar for such industry might need to pay sales tax on the retail price at the import stage irrespective of the fact they supply this sugar to the notified industrial sector or not.

The government; therefore, needs to either exclude extra-fine imported sugar from the ambit of the third schedule or worked out any other reasonable way out to sort out this problem arising out of the proposed amendment.

The time limit for assessment and recovery of sales tax under Section 11(5) is extended through a proposed amendment in this budget. According to the board's explanation, audits are being undertakenon a full six-year basis where the time limit of five years under sales tax is calculated on a month-to-month basis resultantly, some of the periods get lapsed if the audit proceeding is not completed by such time.

It was therefore proposed to increase the time limit of five years up till the end of the financial year in which the relevant date falls. Shehzad has strongly criticised this amendment and said instead of reducing the time period of six years to five years, the amendment has been proposed to increase the time limit.

He said if the tax machinery having all the resources, electronic means and computerised record could not able to complete audit within five years, they should not be given the luxury to enjoy the further extension of time.

He said the government in media articulates to control audit-related issues and harassment, however, these sorts of amendments suggest a step towards altogether an opposite direction.

Copyright Business Recorder, 2021


Disposal of cars prior to registration: Concept of additional tax to curb 'on money' introduced

12 Jun, 2021

ISLAMABAD: The Finance Bill 2021-22 has introduced the concept of additional tax on disposal of vehicles prior to its registration with the Excise and Taxation Department to discourage 'on money'.

According to the Finance Bill 2021-22, every motor vehicle registration authority of the Excise and Taxation Department shall, at the time of registration, collect tax at the rates specified in Division VII of Part IV of the First Schedule, if the locally-manufactured motor vehicle has been sold prior to registration by the person who originally purchased it from the local manufacturer.

Explaining the salient features of the Finance Bill 2021, a tax expert, Amer Javed Ahmad, senior partner, Rafaqat Babar and Co Chartered Accountants explained that the bill proposes to tax the concept of "on" money of vehicles, which is the imposition of tax on disposal of vehicles provided that the vehicle is disposed of without getting it registered.

The bill has now expanded the scope of withholding on, taxpayers included in the supply chain (such as 236G and 236H), domestic consumers of electricity subject to minimum electricity consumption of 25,000, rental income from sub-lease, commission income, removal of separate notice requirement in the cases of concealment, profit on debt realised on GP and certain other funds.

The bill also proposes to increase the revenue by broadening the tax base for IT services, telecommunication industry and agriculture industry by introducing the novel concept of cloud computing and data storage services and altering the definition of industrial undertaking.

To regulate the blanket exemption given to export of IT or IT-enabled services, it is proposed to levy one percent tax on funds received through normal banking channel.

It will empower the government to monitor and regulate black money routed through this provision and to catch plunders. The bill also proposed to delete exemption on medical allowance to salaried class. This would be setback to salaried individuals.

The bill seeks to provide relief by withdrawing a minimum of 12 withholding taxes such as 153B,231A, 231AA, 236P, 236Y, 236B, 236L, 236V, 233A, 233AA, 234A,and236HA.

The bill further proposes to decrease or obliterate the rate of taxation on, turnover, export of services, capital gain on immovable property, profit on debt, oilfield services, warehousing services, logistic services, capital gain on securities, and tax on dividend from certain projects.

The main hurdle to masses who maintain bank accounts for any reason but are not subject taxable income earners. They were burdened with compulsory deduction of tax on withdrawal of money.

They have been now relaxed and mandatory tax deduction has been done away.

Moreover, the bill has proposed to tax property income under the NTR regime and adjustment of business losses against such property income.

The bill further proposes to exempt certain incomes/classes of incomes such as turnover tax exemption to special economic zone enterprises, 10-year exemption of tax for special technology zones authority, developers and enterprises of special technology zones, tax exemption on the import of capital goods, exemption to electronic warehousing receipts traded on PMX, import tax exemption on import of books and agriculture equipment, and tax exemption to baggasse fired power generating units.

The following further propositions have been proposed by the bill whereby, certain powers granted to commissioner have been relinquished such as power to reject advance tax estimates as well as conduct of inquiry under section 122(5A) of the Income Tax Ordinance, 2001.

This amendment is proposed on demands of taxpayers at large. The authorities were misusing to this section to harass the taxpayers. The bill has introduced a totally novel concept of tax credit of 25 percent from the tax liability to women entrepreneurs in order to promote and facilitate women entrepreneurship.

Bill proposes to rationalise the different provisions of the Ordinance by introduction/ alteration of different provisions.


Allocation for defence raised by 6.2percent

12 Jun, 2021

ISLAMABAD: Allocation for defence for Fiscal Year 2021-22 has been raised by 6.2 percent, from Rs1.292 trillion in the original estimates of 2019-20 to Rs1.373 trillion for 2021-22.

The defence budget is 16.19 percent of the total budgetary outlay and 2.87 percent of next year's projected GDP of 47.7 trillion rupees. The nominal GDP for FY 2021 is projected to increase from Rs45,567 billion to Rs47,709 billion.

The original allocation for last year was Rs1.292 trillion, but according to revised figures Rs1.299 trillion had been spent. The military voluntarily opted for a wage freeze in FY 2019-20 because of the economic challenges facing the country. Subsequent to the closure of the Coalition Support Fund after 2018, defence and security needs were met from domestic resources.

The defence budget does not include pensions, estimated to rise by 10 percent next year - to Rs360 billion under current expenditure - while other major defence related procurements and strategic programmes are not made public. The amount budgeted for defence administration is Rs3.275 billion. However, the rest of the allocation is for defence services which include employee-related expenses (Rs481 billion) including salaries and allowances paid to troops in uniform and civilian employees and operating expenses have been budgeted at Rs327 billion that include transport, POL (petroleum, oil and lubricants), rations, medical treatment, training etc.

Around Rs391 billion has been proposed for physical assets utilised for local purchases and import of arms and ammunition and related procurements. Civil works that include funds marked for maintenance of existing infrastructure and construction of new buildings have been budgeted at Rs169 billion. Apart from this, Rs1.978 billion has been allocated under the head of PSDP to the defence division and Rs1.745 billion to the defence production division.

The defence budget of the Pakistan Army is seven percent of the national budget.

Copyright Business Recorder, 2021


Around Rs506bn taxation measures unveiled

12 Jun, 2021

ISLAMABAD: The government has taken measures of around Rs506 billion, including taxation measures of Rs264 billion and enforcement measures of Rs242 billion in the budget (2021-22)to meet annual target of Rs5,829 billion including 17 percent sales tax on crude oil, Federal Excise Duty (FED) on phone calls/SMS messages/internet data usage, 17 percent sales tax on silver/gold jewellery, and 7.5 percent withholding tax on monthly electricity bill of above Rs25,000 of domestic users not appearing on the Active Taxpayers List.

During the technical briefing on the Finance Bill,2021, held at the FBR House, the FBR team of members informed media that total taxation measures have been proposed at Rs383 billion for 2021-22.

Total relief measures stood at Rs119 billion.

The net impact of the measures stood at Rs264 billion.

In order to materialise the fixed tax target of Rs5,829 billion, the FBR will generate Rs2,182 billion through direct taxes, and Rs3,647 billion in the shape of indirect taxes.

The government has reduced tax rate on capital gain tax on disposal of securities from 15 to 12.5 percent; exempted ED to industrial units located in the Fata and the Pata; exemption from FED on motor vehicles up to 850 cc and sales tax reduced from 17 percent to 12.5 percent, and withdrawal of value-added tax (three percent) on motor vehicles up to 850 cc. The FBR will generate Rs7 billion from sugar to be a Third Schedule item and manufacturer to collect tax on retail price.

The FBR has taken customs duties measures of Rs52 billion and relief measures of Rs42 billion. The net impact of the customs duties measures stood at Rs10 billion.

Sales tax/federal excise measures amounted to Rs215 billion, whereas, sales tax relief totalled at Rs19 billion.

The net effect of the sales tax measures comes to Rs196 billion. The income tax measures have been projected at Rs116 billion, whereas, relief has been provided of Rs58 billion. The net impact of the income tax measures totalled at Rs58 billion.

The FBR members informed that the enforcement measures would result in revenue generation of Rs242 billion. They said that the government has reduced the threshold of monthly electricity bill for withholding tax on electricity consumption from 75,000 to 25,000 from domestic users not appearing on the Active Taxpayers' List. Under the Finance Bill 2021, the zero-rating is proposed to be withdrawn from petroleum crude oil, parts/components of zero-rated plant and machinery, import of plant and machinery by petroleum and gas sector, and supply, repair and maintenance of ships.

The FBR will generate revenue of Rs38 billion from this taxation measure.

The FED on mobile phone calls and SMS @ Re1 per call (call exceeding three minutes) and Re0.10 per SMS will generate additional Rs70 billion in the next fiscal year.

The levy of FED on internet data usage at the rate of Rs5 per GB will fetch additional revenue of Rs30 billion.

The government has also announced establishment of border sustenance markets for mainly food items.

The FBR members stated that the FBR has not changed the income tax slabs for the salaried class and the FED on cigarettes. However, the FBR has eliminated block taxation of property income and shift to normal tax regime; reduced block taxation on capital gain on disposal of immoveable properties if gain exceeds Rs20 million, and reduced block taxation on interest income, if it exceeds Rs5 million.

During the current financial year, Tax Laws (Second Amendment) Ordinance, 2021was promulgated to implement corporate income tax reforms to provide a level playing field to all the businesses.

Certain tax credits, concessions and exemptions were withdrawn.

The provisions of the Ordinance have been made part of the Finance Bill 2021, they stated.

The government has withdrawn 12 withholding taxes including collection of tax on payment of royalty to residents; cash withdrawal, banking instruments, banking transactions other than through cash, collection of tax from persons remitting amounts abroad through credit or debit or prepaid cards, collection of tax on domestic air travel, international air travel, extraction of minerals; members by a stock exchange registered in Pakistan, collection of tax on marginal financing by NCCPL, CNG stations, and collection of tax on certain petroleum products. The FBR has abolished 100 percent tax credit for new industrial undertaking if investment is made through equity or proportionate tax credit if investment is made through equity as well as debt and this corporate sector revenue measure will fetch Rs65 billion into the FBR kitty.

The rate of minimum tax was reduced from 1.5 percent to 1.25percent for all persons, for refineries from 0.75percent to 0.5percent, fast moving goods sold by integrated retailers from 1.5percent to 0.25percent, SEZ enterprises from 1.5percent to zero percent and Special Technology Zones (STZs) enterprises from 1.5percent to zero percent.

The shifting of goods from reduced rate (one percent, five percent, 10percent, 12percent) to standard rate (17percent) silver/gold jewelry, fat filled milk, LNG/RLNG will bring additional tax of Rs35 billion.

The withdrawal of exemption on imported luxury food items such as cereals, milk and cream, frozen meat and sausages, fat filled milk at standard rate of GST of 17 percent will fetch Rs14 billion. On enforcement side, the FBR has placed master bill of lading and certificate of origin made mandatory in order to discourage concealment.

The FBR also extended anti-smuggling regime to retailers.

On telecommunication Services, the rate of GST is harmonised and bring down rate from 17percent to 16percent for the Islamabad Capital Territory (ICT).

The government has granted exemption from FED to industrial units located in the Fata and the Pata.

The sales tax relief has been provided on high quality printing paper for the holy Quran and temporary imports by international athletes (SAF Games).

The increase in the threshold of turnover for cottage industry has been enhanced from Rs3 million to Rs10 million.

The export proceeds of services to be taxed @ one percent at par with goods and this measure will bring Rs5 billion revenue in the kitty.

For discouraging "on money" - penal additional tax on sale of vehicle will be imposed from Rs50,000 to Rs200,000 on the basis of capacity of engines of cars prior to registration.

Copyright Business Recorder, 2021


Power subsidies raised by over 300pc

12 Jun, 2021

ISLAMABAD: The federal government has increased power sector subsidies by over 300 percent to Rs 510 billion for fiscal year 2021-22 as compared to Rs 124 billion allocated in budget for 2020-21, which was later revised upward to Rs 350 billon.

Of this, an amount of Rs 136 billion has been earmarked for the Independent Power Producers (IPPs).

The government recently paid Rs 89.2 billion to 20 IPPs as per revised agreements and increased allocations for Power Holding Private Limited (PHPL) by 152.6 per cent to Rs 118 billion against revised allocations of Rs 46 billion during 2020-21. Allocation for inter-Disco tariff differential has been enhanced by 67 per cent to Rs 184 billion for 2021-22 as compared to budget allocations of Rs 110 billion in 2020-21 and revised estimate of Rs 191.830 billion. This implies that inter-Disco tariff differential subsidy has been reduced by over 4 per cent vis-à-vis revised allocations.

Allocation for subsidy to Karachi Electric (KE) has been massively enhanced by 450 per cent to Rs 85 billion for 2021-22 as compared to budget allocation of Rs 15.5 in 2020-21 which was revised to Rs 16 billion.

KE will get a subsidy to Rs 56 billion as tariff differential in 2021-22 which is 460 per cent higher than budget allocation of Rs 10 billion in 2020-21 and 250 per cent higher than revised allocation of 2020-21. An amount of Rs 7 billion has been earmarked for KE's tariff differential for agriculture tubewells in Balochistan. KE will also get Rs 22 billion as industrial support package in 2021-22 which is higher by 340 per cent against Rs 5 billion of 2020-21. Tariff Differential Subsidy (TDS) for agri tub-wells in Balochistan has been increased to Rs 4.4 billion for 2021-22 against budget allocation of Rs 3 billion, which was later revised to Rs 7 billion. An amount of Rs 7.6 billion has been earmarked to pay to Wapda/ Pepco receivables of ex-FATA. However, no amount has been allocated to pay to Wapda on account of tariff differential for AJ&K, despite the fact that an amount of Rs 1 billion had been allocated for 2020-21 which was revised upward to Rs 27 billion. An amount of Rs 2 billion has been earmarked for tariff differential to AJK as compared to revised allocation of Rs 36.537 billion.

Allocation for payment of Discos receivables of merged districts of KP has been enhanced by 80 per cent to Rs 18 billion for 2021-22 against Rs 10 billion in budget estimates, which was later on revised to Rs 15 billion.

For Industrial Support Package (ISP) an amount of Rs 15 billion has been earmarked in budget of 2021-22 while Rs 26 billion has been allocated for zero rated industries subsidy.

According to budget documents, an amount of Rs 171 billion has been earmarked as subsidy for other sectors/ departments - Rs 10 billion has been earmarked as subsidy to LNG sector for providing gas at lower rates to industry, Rs 10 billion for PSO, APL liabilities, Rs 7 billion for Passco for wheat operation and wheat reserved stock and Rs 6 billion for USC Ramazan Package against Rs 3 billion budget estimates and revised allocation of Rs 8 billion.

Allocation for subsidy for others has been increased by 7 per cent to Rs 53 billion for 2021-22 as compared to budget estimates of Rs 49.5 billion in 2020-21 but it is 44.6 per cent less vis-à-vis Rs 36.650 billion of revised allocations. Of this, an amount of Rs 8 billion has been earmarked for wheat subsidy against Rs 6 billion of 2020-21. Allocation for Metro Bus Subsidy has been slashed by 100 per cent to Rs 1 billion from Rs 2 billion, whereas subsidy to fertilizer plants will remain at Rs 6 billion. An amount of Rs 5 billion has been allocated for provision of (unnamed) subsidy.

For Naya Pakistan Housing, an amount of Rs 30 billion has been allocated as subsidy for 2021-22 against the same allocation in budget 202-21. However, the government has so far released only Rs 500 million. An amount of Rs 3 billion has been estimated as mark-up for Naya Pakistan.

However, no amount has been allocated for white fly pesticide, Prime Minister's fiscal package, Prime Minister's package for Rabi crops and agri loans by ZTBL to farmers. In 2020-21, the government had not earmarked any amount either for these items but paid Rs 15.2 billion as revised allocations.

In a nutshell, overall subsidy allocations have been increased by over 225 per cent to Rs 682 billion for 2021-22 against budget allocations of Rs 209 billion in 2020-21 and 59 per cent as compared to revised allocation of Rs 430 billion.

According to Finance Minister, subsidies are projected at Rs 682 billion up from Rs 430 billion of revised estimates, mostly comprising payments of due of IPPs, tariff differential subsidies and subsidies for food.

Copyright Business Recorder, 2021


Textile sector takes a dim view of FY22 budget

12 Jun, 2021

KARACHI: The textile sector has termed the measures, announced by the government in the budget, as insufficient for a significant increase in the country's exports.

The value added textile sector has asked for the more relief and concessions to achieve the double digit export growth target and earn over $26 billion foreign exchange in the next fiscal year 2021-2022 (FY22).

Leading exporter and Chairman Pakistan Apparel Forum (PAF), Jawed Bilwani has welcomed the government's announcement of new Uniform Export Facilitation Scheme, however, expressed disappointment on the measurers announced in the budget for the textile sector. "Most of our [textile sector] demands were not considered in the budget," he said.

He said that major demand of value added textile exports associations was restoration of Zero Rating on GST "No Payment No Refund Regime" through revival of SRO 1125 in letter & spirit, but the federal budget is missing this important demand. The revival of zero rating regime will help resolve the liquidity issues of the textile exporters.

Bilwani said that the federal government has allocated some Rs20 billion for the DLTL as against the outstanding dues of Rs32 billion. "We believe that with current budgetary measures, the export is likely to increase 5-6 percent in the next fiscal year," he added.

The federal government has allowed duty import of cotton yarn, which is good news for the textile sector. At the same time, there is need to consider other demands of textile sector including suspension of Export Development Fund surcharge, reduce and fix tariffs of electricity, indigenous gas & RLNG.

Ijaz Khokhar patron-in-chief Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) said that budget measures are insufficient for a significant increase in the country's exports particularly textile exports.

He said that despite the largest export oriented sector, most of the demands of the value added textile were not considered in the federal budget 2022. "Our demand of Zero rating was not accepted, because of which the textile sector will remain faced with liquidity issues due to non-payment or delay of refund claims," he added.

Khokhar said that the federal government has allocated some Rs200 billion for three major crops i.e. wheat, rice and cotton. The cotton crop is on the lowest level and there was need to allocate more funds for the cotton crop to achieve a better production to reduce the import of cotton and cotton yarn. Currently, the textile sector is facing shortage of cotton yarn and spending a huge foreign exchange on the import of this commodity, he mentioned.

He urged the federal government to revise it measurers for the industry and export sector to achieve a double digit export growth in the next fiscal year.

Chairman Pakistan Weaving Mills Association, Yousuf Yaqob said that the budget measures will not ease the liquidity issues of the textile sector as they will have to pay 17 percent sales tax. "Our demand for zero rating or reduction in the sales tax from 17 percent to 5 percent," he said and added that both demands were not considered in the budget.

Copyright Business Recorder, 2021


Centre not giving promised money to provinces, claims PPPP

12 Jun, 2021

ISLAMABAD: The Pakistan People's Party Parliamentarians (PPPP) information secretary Shazia Atta Marri said the federal government is not giving the money promised to the provinces under NFC award.

"Under the Constitution, a fixed portion of NFC award is given to the provinces. Sindh is objecting that it is not getting its constitutional share. Not only Sindh, but the other three provinces are also not getting their share but they have chosen to remain silent. Sindh is constantly being abused," she said, while addressing a news conference on Friday accompanied by Nasir Shah, Saeed Ghani, Murtaza Wahab, Waqar Mehdi and Ajiz Dhamra.

Shazia said the PSDP was approved by the NEC, which should hold at least two NEC meetings a year but only one meeting was held.

She said Sindh's share in NFC was Rs770 billion and in the last 11 months Sindh received only Rs613 billion so far, whereas it should have gotten Rs690 billion in the last 11 months. She hoped that Sindh will get Rs147 billion more in the next month.

The PPPP information secretary said we do not want reduction in the share of Balochistan, Pakhtunkhwa or Punjab.

"It was not expected of Asad Umar, who claims to know the Constitution, to mislead the people. If the provinces do not build motorways, then why is Sindh being demanded to build motorways," she asked.

She said some of the bills were passed on Thursday, were not even passed by the standing committees. She said the NEPRA bill was not passed by the standing committee. The PPPP leader said the PTI had tarnished the image of Parliament by bulldozing those bills. She claimed that 'a fraudulent' and controversial census was approved by the Council of Common Interests (CCI).

She said that the Sindh government had approached the Parliament against the fraudulent approval of the census. "Sindh has written a letter to discuss the issue of the census in a joint meeting of the parliament."

Regarding water shortage in Sindh, she said water should be provided to Sindh under an agreed principle. She said the federal government wanted the provinces to fight each other.

Nasir Shah said if Bahria Town had committed any abuse, the Sindh government was with the victims. He said Bilawal Bhutto took notice of the news about Bahria Town after which we went to the spot.

"We support all the locals. Several arrests have been made and no injustice will be done to anyone." Shah said several concerns of the local population were allayed.

Copyright Business Recorder, 2021


'Friendly' budget relies on industrial growth

12 Jun, 2021

It is a confidence booster budget and the direction is right. Commerce and industrial policies are attempted to be decoupled from the influence of finance and there are signs of central planning. Yet the planning ministry is not in the scene. The groundwork for the policies - related to trade and tariffs, automobile, refinery, and others have been going on for some time.

But for the first time, revenues are not the prime consideration. Targets are elusive. Threat of Covid-19 is still there and the IMF is giving further time-out. The beauty of the budget is that there are numerous small and token steps taken where the revenue opportunity loss is probably less than potential economic gains. The optics are really good.

It is evident that the government is betting on the manufacturing sector. The industry needs to invest. And foreign investments must come into exporting sectors. The risk is growing global commodity prices which puts the current account into jeopardy. But if it is to be financed by FDI, then there is no harm in running a deficit for a few years. The economic model can move on a sustainable path despite that.

Not to mention that there can be many a slip between the cup and the lip. There is no other way but to open the economy to face the challenges upfront and rely on the private sector to generate growth. Foreign capital likes openness. The fiscal deficit is not coming in control. Then add the energy sector's circular debt problem. The risks are certainly not small. And the solution to both generating revenues and solving the energy surplus capacity problem is by attaining consistent economic growth. For growth, the budget must be business friendly and that is what the PTI government understands well.

In fact, the PTI government's policies from day one were pivoted on reviving industrial growth and engaging private sector through fiscal and other incentives. The approach contrasts with what Ishaq Dar had adopted. After a decade or so, exporting sector is investing and billion-dollar private sector projects - not IPPs, are in the making.

There is also an awareness at the top government level that existing taxpayers can no longer be burdened with more taxes and compliances, while businesses cannot grow at higher electricity tariffs. But to develop a sustainable growth structure, the circular debt build-up will have to be arrested. For that, the economic wheel must spin fast in manufacturing and formal services. Agriculturists are getting mouthwatering support price. In livestock, there are pledges of removing duties on vaccine and feed imports.

A feel-good factor is being created. Stock market is bullish. Earnings are better. Capital gains tax and turnover taxes have been lowered. This will help trade volumes to grow further. The question is when will price multiples be rerated. If the foreign portfolio investment pours in at the PSX, then there are higher chances of these coming into manufacturing, agriculture and IT. Having said all that, the backbone of the economy is SMEs - manufacturing, and trading/retailing. Here one has high taxes and burdensome compliance and the other operates in shadows. The fundamental shift in the taxation implementation policy is to simplify returns, inculcate a culture of self-assessment, and bring in automated and third-party audit. Incentives are there for digital transactions and spread of Point of Sales (POS) machines. The attempt is to bridge the gap between manufacturing and trading/retailing SMEs.

The other issue of SMEs is lack of formal finance. For that, overall economic formality has to enhance. The math is simple. Banking deposits are around one third of formal economy. Half of these are invested in government securities and rest is credit to the private sector, within which SME's share is minuscule. One way is enhancing SMEs within the limited pie. Other is to expand banking sphere. Here some steps are taken. One is removal of withholding tax on banking transactions - the formal has been shrinking ever since it was imposed. That is over now. This coupled with digital incentives, the formal banking deposits may grow and the cash economy can potentially be curtailed.

The question is what is there for the common man suffering from high inflation? Well, not much directly. As FM said, it is traditional trickle down. Nonetheless, salaried class is happy to not have any increase in taxes. The minimum wage is increased to Rs20,000. The poor are being supported under the Ehsaas programme which is becoming more effective. Here the use of technology is doing the trick. Soon electricity subsidies will be routed through it and small farmers should be provided subsidized inputs through this window.

But all this may not be enough for the middle class. The economy must grow consistently for years before there is something for the common man which is a shame, but let's remember that it is a budget, not a magic wand.

Copyright Business Recorder, 2021


Extremely generous Eidi?

Updated 12 Jun, 2021

The budget 2021-22 can best be described as an extremely generous Eidi to the people of this country: 10 percent raise in civilian and military personnel salaries, minimum wage raised to 20,000 rupees, small interest free loans to urban and farm poor, cheap credit for housing, fiscal and monetary incentives galore to exporters/productive sectors (industry and agriculture), a rise in overall subsidies by 225 percent, a rise in targeted subsidies under the umbrella of the Ehsaas programme through existing and proposed issuance of cards ranging from Benazir Income Support Programme/cash disbursement, food coupons, farm inputs (seeds/fertilizer), the Sehat Sahulat Card and last but not least a pledge not to raise utility rates or petroleum prices. Unfortunately, the cost of the Eidi is to be borne by an Uncle getting progressively poorer, reflected by unsustainable budget deficits for the three years the Khan administration has been in power - 9 percent in 2018-19, 8.1 percent in 2019-20 and projected 7 percent in 2020-21. Next year's budget deficit is projected at 6.3 percent, which necessitates a rise in federal revenue of 21 percent (a challenge at best even if the projected 4.8 percent growth is achieved), a rise in non-tax revenue of 29 percent and a provincial surplus of 570 billion rupees - doubling from this year's budgeted surplus of 242 billion rupees with no revised estimates under this head.

The most obvious solution is heavier reliance on borrowing - from domestic and external sources. However with the government redefining relief as refusal to implement the time bound quantitative conditions and structural benchmarks agreed by former finance minister Dr Hafeez Sheikh, dismissed on 30 March 2021, and the incumbent Governor State Bank of Pakistan Dr Reza Baqir with the International Monetary Fund (IMF) there is a real danger that budgeted concessional sources of funds may dry up from multilaterals and bilaterals in the event that the Fund programme is delayed or suspended.

The 8.487 trillion rupee budget envisages: (i) a 20 percent rise in total external loans budgeted for 2021-22 - 2,747,792 million rupees against 2,286,859 million rupees in the revised estimates of this year. The total mark-up on foreign loans is budgeted at 302,506 million rupees against 239,568 million rupees in the outgoing year. Actual payables would depend on the exchange rate (which may well explain a thinly veiled warning contained in the Economic Survey 2020-21 that the country will follow an exchange rate regime based on economic fundamentals) as well as on reaching an agreement with the IMF in the ongoing sixth review; in the event that the IMF delays the review pending the delivery of the proposed alternative plan to the one agreed with the government in February 2021 then the government may have to rely on more expensive sources of financing including commercial borrowing whose reliance in the budget 2021-22 is disturbingly higher than in the current year - 779,200 million rupees against 762,335 million rupees in the current year. It is relevant to note that there is no budgeted oil facility from Saudi Arabia (in the current year or the next) or China safe deposits though 496 million rupees as IMF loan for budgetary support is included; (ii) estimated provincial surplus of 570 billion rupees next year against 242 budgeted surplus in 2020-21 appears to be too optimistic; (iii) non-bank borrowing (national savings and others) is cited at a whopping 1241 million rupees and details in the public account (net) reveal national savings of only 66,137 million rupees against the budgeted 223,279 million rupees in 2020-21 with revised estimates of 52,997 million rupees - a decline no doubt attributable to the pandemic, high inflation and no salary raise last year; the low budgeted amount next year indicates that the Finance Ministry is projecting high consumption next year that one hopes is not fuelled by inflation; (iv) permanent public debt mainly sourced to ijara sukuk (debt equity) is budgeted to rise from 437,410 million rupees in 2020-21 to 1,200,000 million rupees in 2021-22 - a rise of 174 percent whose contribution to debt servicing would rise dramatically in the event that the sixth IMF review is postponed or suspended; (v) privatization proceeds are budgeted to generate 252 billion rupees - an amount that appears optimistic as attempts to privatize identified state owned entities for the past four years have been unsuccessful due to multiple factors including organized workers resistance.

Ehsaas programme is budgeted to receive 260 billion rupees - a rise of 24 percent from this year but with no credible poverty data this rise cannot be used as a yardstick to show a decline in poverty levels.

Tax revenue is budgeted to rise to 5829 billion rupees, close to the Fund's target of 5963 million rupees target for the year. However, indirect taxes, whose incidence on the poor is greater than on the rich, are budgeted to generate 62 percent of total FBR revenue - a rise from 58 percent in 2020-21. And disturbingly petroleum levy, a primary source of inflation, is budgeted to generate 610 billion rupees - 3 billion rupees more than what is noted in the second to fifth IMF review documents.

The source of revenue, the Finance Minister noted, would be distinct from what was agreed in February 2021 with the IMF. New taxes on income would generate an additional 58 billion rupees while the February 2021 ordinance withdrawing exemptions/concessions now made part of the finance bill are projected to generate 80 billion rupee. Tax on consumption (sales and excise duty) is projected to have a net impact of 196 billion rupees.

The tax machinery would be reoriented to go after evaders, identify those out of the tax net and information technology would be used extensively to detect prospective tax payers - tax enforcement measures projected to generate 242 billion rupees. GST base will be expanded and incentivize consumers through a system of prizes on sales tax receipts, relax restriction on input tax adjustment and withdraw federal excise duty and reduce sales tax on locally manufactured cars, impose federal excise on mobile calls exceeding 3 minutes, internet data usage and SMS messages.

However what was perhaps the most disturbing aspect of the budget 2021-22 was the following statement no doubt endorsed by Shaukat Tarin in his capacity as the Finance Minister, the architect and erstwhile defender of the NFC award: "revisiting the NFC award. Moreover persuading the provinces to fulfil their funding commitments made at the time of the merger of the erstwhile FATA."

Copyright Business Recorder, 2021

Business & Finance

Federal Budget: Business community, political parties give mixed reaction

Updated 12 Jun, 2021

KARACHI: Business community and political parties expressed mix reaction on third budget of PTI government for the year 2021-22. They were of the view that the final opinion can only be shared after going through the budget documents and finance bill.

Vice President, Pakistan Businesses Forum (PBF) Ahmad Jawad has criticised the federal government for doing "too little, too late" in terms of creating fiscal space for agriculture sector in its over hyped budget 2021-22.

He said despite two digit inflation and record growth in major agriculture crops in the fiscal year of 2020-21, government once again give peanuts in the 2021-22 budget speech, except two lac loan facility without interest payment will be given to small farmers on the account to purchase tractors and other agriculture machinery; including one lac and fifty thousand loan facility without interest payment for sowing of all crops given to small farmers. Further one billion rupee will be allocated to increase olive production.

Unfolding the details, Jawad stated that there was no increase in the agriculture credit facility. No incentive announced in the budget speech for the enhancement of agriculture exports, no incentive given for the new start ups in the field of agriculture sector, no incentive were given on the subsidy of fertilisers for the farmers and no incentive given to horticulture sector which is one of the major share holder in the country's exports. However, tax exemption on the storage facility for agri crops is a welcoming step.

He further said government fixed the agriculture growth target at 3.5 percent for the coming fiscal year and it seems agriculturists will achieve the target on there own and once again provide due support to the country GDP target for the year of 2021-22.

Ahmad Jawad welcomed the development package for the areas of South Balochistan and the city of Karachi and similarly termed GDP target of 4.8 percent a good omen for the economy; including relief for telecom sector in the form of duties.

Former President of KCCI, Abdullah Zaki welcomed the reduction of sale tax rate from 17 percent to 12.5 percent and exemption of value-added tax on small cars up to an engine capacity of 850cc.

He said that the reduction of duty on industrial raw material will help reduce the cost of doing business. Revenue target is achievable, he added. He also welcomed the self assessment scheme and expressed hope that it will reduce blackmailing.

Showing his dismay over the federal budget, Pasban Democratic Party (PDP) Chairman Altaf Shakoor said the hapless nation again witnessed yet another disappointing budget of the PTI government in which no relief was given to price hike affected masses. He said public sector development programme of just Rs900 billion is peanuts for provinces.

He said 25 percent raise in salaries of government employees was promised but just 10 percent increase was given to them, which is injustice and trickery. He said the price hike is on the fire and raise in salaries is not proportionate to it.

He asked who would get Rs530 billion subsidy for electricity as the electricity rates in Pakistan are already highest in Asia.

Altaf Shakoor said that tagging Rs12 billion for agriculture sector is a joke. He said 8 percent target for inflation in this budget would open new floodgates of poverty and hunger in Pakistan.

He said it seems that these rulers would present a mini-budget within next six months.

Altaf Shakoor said that approval of this budget from cabinet is disappointing. He said mafias are benefited in the budget while there is nothing for the poor. He said this heavily deficit budget would further increase burden of loans. He said the PTI government never gave attention to widen the tax net and find new avenues of revenue collection.

He said 4.8 percent growth rate is lower even to the growth rate of Bangladesh. He said the government has done nothing to promote industry and this budget has also not allocated sufficient funds for industrial growth.

He said both government and private sector employees are hard hit by price hike and steps should be taken to increase the salaries of private sector employees at least at the rate of 10 percent.

United Business Group, spokesman, Mirza Ikhtiar Baig termed the federal budget as good budget in the present circumstances and added that efforts have been made to support the neglected sectors including IT, SME etc.

He said that Pakistan is an agriculture country but in last few years cotton production has declined from 13 million bails to 6 million bales. He said efforts have been made to improve agriculture products, which is commendable.

He especially thanked Chairman FBR Asim Ahmed and Member Inland Revenue (Operations) Dr Ashfaq Ahmed for crossing Rs4.143 trillion revenue collection in 11 months of the current fiscal year and payment of Rs250 billion refunds under faster system that has helped exporters to improve their cash flows resulting in recent increase in exports.

Copyright Business Recorder, 2021

Business & Finance

Rs6027.35m allocated for Law & Justice Division's schemes

12 Jun, 2021

ISLAMABAD: The federal government has allocated Rs6027.35 million for the ongoing and new schemes of the Law and Justice Division in the budget for fiscal year 2021-22.

The amount kept for the Supreme Court for the next financial year is Rs2,810 million and for Islamabad High Court Rs1,086 million.

It allocated Rs3,752 million for ongoing schemes, which include; Automation of Federal Courts/Tribunals (Phase-I) Islamabad Rs4,500 million, construction of Camp Office for Federal Shariat Court in Peshawar Rs118.19 million, construction of Federal Courts/Tribunals Complex at Islamabad Rs29.57 million, construction of Federal Courts/Tribunals Complex at Peshawar Rs91.33 million, construction of Islamabad High Court, Islamabad (Received PC-I) Rs1,337.25 million, construction of new building for the Supreme Court, Branch Registry at Karachi Rs2,100 million, establishment of Alternate Dispute Resolution (ADR) Centres in Islamabad Rs9.32 million, replacement of existing No01 passenger lift at Supreme Court of Pakistan, Islamabad Rs8.73 million, strengthening of Planning and Monitoring Unit in the Ministry of Law and Justice, Islamabad Rs27 million, and strengthening the Ombudsman System of Administrative Justice and upgradation/expansion of Online Complaint Management System, Islamabad, Rs26.29 million.

For the new schemes, Rs2,275.13 million have been allocated, which are; acquisition of 5.4 acres of land for construction of Secretariat for Attorney General for Pakistan, Advocate Generals, and allied offices in connection with the Supreme Court of Pakistan Rs380 million, archiving and digitization of legislations and record of the Ministry of Law and Justice Rs61.656 million, automation of Federal Court/Tribunals Rs215 million, construction of Session Divisions (East and West) at G-11/4, Islamabad Rs1,500 million, replacement of two passenger elevators at Federal Shariat Court Building, Islamabad Rs28.24 million, strengthening of National Judicial Automation Unit (Feasibility Study-PC-II) Rs30.90 million, and Upgradation and expansion of "Data Centre" of the Federal Ombudsman's Secretariat, Islamabad Rs58.32 million.

Copyright Business Recorder, 2021

Business & Finance

Cut in CGT, deletion of WHT positive for capital market: analysts

12 Jun, 2021

KARACHI: With the reduction in Capital Gains Tax to 12.5 percent and deletion of WHT, the Federal Budget for FY22 is positive for Pakistan equities, analysts said.

The federal budget for FY22 was presented by Finance Minister Shaukat Tarin in the National Assembly on Friday.

"We believe the budget announcement is mostly positive for Pakistan equities," Muhammad Sohail, leading analyst at CEO of Topline Securities said.

Some of the key announcements from the budget are reduction in Capital Gains Tax to 12.5 percent from 15.0 percent with a view to lower rates further and deletion of WHT on NCCPL Margin financing. The Turnover Tax has been reduced to 1.25 percent from 1.5 percent.

"The budget, as expected has focused on inclusive and sustainable growth, while providing relief to masses through the Ehsaas Program (allocation of Rs 260 billion), providing cheaper financing and other measures," Muhammad Sohail said.

The budget also does not entail any new material taxes, while there have been no changes in tax rates for salaried class, he added.

As per preliminary analysis, he believed the budget announcement is positive for Flat Steels (cut in HRC duties), Pharmaceuticals (cut in duties on import of APIs), IT (Zero Rating), Textiles/Consumers/Foods (reduction in duties) and Refineries (exemption on tax on BMR). The budget is neutral to positive for Power (allocation of subsidy towards PHPL and IPPs), Banks (removal of WHT for non-filers), Cements and Rebar Steel (higher allocation for development expenditure) and Autos (reduction in duties on car below 850CC).

According to him, the budget is negative for Telecom operators due to higher taxes.

The government has set a GDP growth target of 4.8 percent for FY22 versus provisional GDP growth of 3.94 percent in FY21. The government expects Agriculture, Industrial and Services sector to grow by 3.5 percent, 6.5 percent and 4.7 percent, respectively during FY22.

An analyst at AKD Securities said that the Budget'22 appears highly positive with the reduction in CGT being a key development - after years of demand by the investment fraternity. At the same time, Capital Market budgetary measures include removal of WHT on marginal financing by NCCPL and removal of WHT collected from members by the PSX.

He said initial impression indicates the Refinery sector as a key beneficiary (10 year tax exemption on deep conversion new refiners and BMR for existing). The incidence of tax exemption hints at likely approval of other tenets of the Refinery Policy in the upcoming days.

Other beneficiaries of Budget'22 include Pharmas (exemption of CD and ACD on APIs), Food (duty relaxation on RM), Footwear (duty relaxation on RM), Chemicals (duty relaxation on RM), Textiles (reduction/exemption of CD, ACD and RD on RM falling under 589 PCTs; rationalization of WHT for exporters) and Food (reduction/exemption of CD/ACD for poultry industry and RM for food processing industry).

He said budget will have negative connotation for 800cc below manufacturers (removal of RD and CD on 850cc below CBUs).

Copyright Business Recorder, 2021

Business & Finance

Rs21.04bn earmarked for Interior Division under PSDP

12 Jun, 2021

ISLAMABAD: The government has earmarked a sum of Rs 21.04 billon for Interior Division for fiscal year 2021-22 under Public Sector Development Programme (PSDP), compared to Rs14.76 billion in fiscal year 2020-21.

The budget document shows an increase of 42.6 percent in funds allocated for various attached departments of the Interior Ministry, including Federal Investigation Agency (FIA), Islamabad police, Immigration and Passport (I&P), Frontier Constabulary (FC), Pakistan Coast Guards and Pakistan Rangers, and Islamabad Capital Territory (ICT) administration

According to budgetary document released Friday, the Interior Division would execute 26 new and 24 ongoing projects during next financial year 2021-22.

Out of Rs 21.04 billon, Rs 3154.671 million allocated for land acquisition for conduction of water from Indus Water System at Tarbela Dam to the twin cities of Islamabad and Rawalpindi, while another Rs 3000 million has been earmarked for construction of 10th avenue Islamabad.

The government has allocated Rs 1717.380 million for Korang River and Rawal Lake Water Treatment Islamabad, and set aside Rs 1000 million allocated for balance works for operationalization of metro bus from Peshawar Morr to new Islamabad International Airport.

According to the budget document, Rs 825 million for construction of Koran bridge and PWD underpass Islamabad and Rs 800 million for construction of Model Prison at H-16 Islamabad.

In the budget 2021-22, Rs 710.215 million for capacity enhancement of Western Border by rising eight additional wings for Frontier Crops Balochistan, Rs 530 million allocated for Water Supply System in Forward Area of FC south DI Khan and another Rs 500 earmarked for development infrastructure in UC Sohan, Rajwal Town, Chak Shahzad, Saidpur, Noorpur Shahan Malpur, KoHathical, Phulgran, Pindi Bhawal and Kurri Islamabad.

Under the new scheme, Rs 457 million has been allocated for construction of accommodation for Bhitall Rangers at Karachi, Rs 400 million for feasibility study for conduction of water from Indus water system at Tarbela Dam to the cities of Islamabad and Rawalpindi and another approved for Rs 400 million for operational improvement of FIA in Anti Money Laundering and Counter Terrorism and Case Management System.

As per the budget breakdown, Rs 400 million has been earmarked for revamping of Cyber Crime Wing of FIA, besides setting asides Rs 400 million for construction of accommodation for 2 wing headquarters at Mehrban Killi and Barai Pakdara Khyber Tribal district FC Khyber Pakhtunkhwa.

The government has allocated Rs 400 million construction of accommodation for 2 wing headquarters at Jamal Maya and Chari Killi Orakazi Tribal district FC KP Peshawar and earmarked another Rs 359.500 million for construction of administrative and operation facilities of headquarters Wana FC KP.

Copyright Business Recorder, 2021


Proposal to tax internet data usage criticised as reactions to budget pour in

  • Finance Minister Shaukat Tarin announced proposals in speech earlier on Friday
Updated 11 Jun, 2021

The Pakistan Tehreek-e-Insaf (PTI) government presented its third budget with a total outlay of Rs8,487 billion on Friday.

Apart from all the figures and analysis, the budget is also a day that allows Pakistanis to give their two cents on the country's economic conditions.

Presented by the newly-seated Finance Minister Shaukat Tarin, the budget started off with usual sloganeering from the opposition members, much to the annoyance of many but something that has become a part of the speech in recent years.

“The traditional screaming and chanting inside the Parliament during the budget speech is so annoying. This trend should stop,” said journalist Wajahat Kazmi.

Members of the government lauded the measures taken in the Budget 2021-22. Minister for Maritime Affairs Ali Haider Zaidi termed it a ‘progressive budget’ and was of the view that it will benefit SMEs, non-conventional exports and will also generate mass level employment.

Meanwhile, skeptics were of the view that the budget will not bring any change in their daily lives.

Others expressed concern over the proposal to increase the tax on mobile internet usage. Former head of Digital Pakistan, Tania Aidrus, pointed out that taxing the internet further is a ‘regressive’ move, which will not help the move towards a 'Digital Pakistan'.

Pakistan targets 4.8% GDP growth in upcoming fiscal year

In its budget proposal, the government said that in order to "reap reasonable revenue, federal excise on mobile phone calls exceeding three minutes at Rs1 per call, SMS message at Rs0.1 per SMS, and internet data usage at Rs5 per GB is being proposed. This will result into mild taxation of a broad spectrum of population."

However, reports started circulating that the 'regressive measure' could be rejected when the Finance Bill is presented in the lower house of parliament.

Meanwhile, remembering past measures, an individual congratulated former finance minister Abdul Hafeez Shaikh for ‘stabilizing and streamlining’ the economy.

Others were more critical of the government, terming the allotment of budget as ‘unfair’ and catering only to the elite.


Pakistan targets 4.8% GDP growth in upcoming fiscal year

  • Finance minister unveils third budget of PTI government
  • CGT reduced on sale of shares
  • No new taxes on salaried persons in upcoming fiscal year
Updated 12 Jun, 2021

The Pakistan Tehreek-e-Insaf (PTI) government unveiled its third budget on Friday with an aim to balance GDP growth and fiscal expenditure amid loud ruckus by the opposition.

The budget announcement is being made at a time when Pakistan is combating challenges on multiple fronts including pandemic-induced poverty, a strangling fiscal deficit, and economic recovery.

Finance Minister Shaukat Tarin, presenting the budget for PTI for the first time, continued to power through his speech even as chants by the opposition got louder across the hall.

Tarin, the country's fourth finance minister in less than three years of the PTI government, began his speech drowned in noise by the opposition. Such an environment has become usual in the National Assembly when a government presents the budget. Similar scenes were also seen when the Pakistan Muslim League-Nawaz presented the budget.

Updates and major announcements

The total outlay of the budget stands at Rs8.49 trillion, up 19% from the revised number of the previous year.

Reduction in rate of capital gains tax on disposal of securities from 15% to 12.5%, reveal budget documents. The announcement is likely to give a boost to the KSE-100 Index that has rallied over 70% since its fall at the onset of the pandemic in March 2020.

Defence spending to be Rs1.37 trillion in the upcoming year.

Keeping in view inflationary pressures, salaries of federal government employees and pensions would be increased by 10%, says Tarin.

Allocation for subsidies increased to Rs682 billion.

Withholding taxes on the usage of mobile phone services has been proposed to be reduced.

Vaccination drive will cost Pakistan $1.1 billion till the end of fiscal year 2022 as it aims to inoculate 100 million citizens by then, says the finance minister.

Focus will need to be on increasing production of major crops so that the country does not rely on imports

No new taxes on the salaried class, says Tarin. "The government will introduce reforms in the taxation system that would make it easier to file returns."

CKD kits for electric vehicles will see a reduction in duty, adds the finance minister. Federal excise duty on cars up to 850cc produced in Pakistan will also be reduced.

Karachi's transformation plan will be allocated Rs98 billion from the PSDP, says Tarin. Allocations have also been made to uplift Balochistan and Khyber-Pakhtunkhwa.

An 18% increase in tax collection has come on the back of Pakistan's economic recovery, says Tarin, adding that those who criticise need to look at the revenue figures as well.

The ex-banker says focus will need to be on increasing production of major crops so that the country does not rely on imports. One of Pakistan's major challenges is controlling its import bill that usually spirals, and leads to a balance of payments crisis.

Budget 2021-22 will be pro-growth, and Pakistan will target 4.8% in the coming fiscal year, says Tarin.

Pakistan will offer interest-free loans up to Rs500,000 to boost spending by households, adds the finance minister.

Tarin says Pakistan will take different initiatives to help lift people out of poverty including the Ehsaas programme, adding Rs260 billion have been allocated to it, which is the highest so far.

This is a budget meant to promote growth, says Tarin. Federal PSDP allocation has been increased to Rs900 billion, up from the original allocation of Rs630 billion in the previous year.

The ex-banker also says a national emergency programme has been announced to promote the livestock sector.

Investments and allocations to be made in projects that help people, says Tarin.

On Thursday, Tarin, while unveiling the Economic Survey 2020-21, credited the government for its policies in response to multiple challenges, but said the economy needed a growth of 6-7% if it wanted to reduce unemployment. Pakistan registered GDP growth of 3.9% in the outgoing fiscal year, a number that beat many earlier estimates.

However, many believe that higher growth will need to be financed in part by government expenditure.

The government now has the added challenge of financing Pakistan's vaccination drive as it ambitiously plans to inoculate a maximum number of people against Covid-19 in as little time as possible. The government has already announced that it will be mandatory for all private and public sector employees to be vaccinated, with provinces also introducing penalties of salary suspensions. A couple of days ago, Pakistan announced that it has vaccinated 10 million people.

A recurring wave of Covid-19 and frequent, but 'smarter', lockdowns have already put the economy on a stop-and-start loop. However, Tarin said Pakistan's response to the pandemic has been much better than that of other countries.

JP Morgan puts weight behind Pakistan's economy, but cautions over challenges

In its report earlier this week, JP Morgan, a leading financial services company, said that it saw Pakistan's economy growing at 4% in the coming fiscal year.

"The risks of restrictive actions to contain the virus remain and continue to weigh on the growth outlook," said JP Morgan in its report titled, 'Pakistan: Reassessing the investment thesis'.