- Pakistan moves into the next fiscal year with a growth target of 4.8% in mind
- Several proposals hailed as positive for economy
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).