Gross revenue has been estimated at Rs 3,945 billion for the next fiscal year with an ambitious revenue collection of Rs 2,810 billion by the Federal Board of Revenue (FBR). Finance Minister announced a 10 per cent ah-doc relief for the federal government employees from next fiscal year as well as a 10 per cent increase to those employees in grade 1-15 drawing fixed medical allowance of Rs 1,000 per month. A five per cent increase would be allowed to them in conveyance allowance and an increase in minimum pension to Rs 6,000 from Rs 5,000 and minimum wage to Rs 12,000. Finance Minister stated that share of the provinces is estimated at Rs 1,720 billion for the next fiscal year, up by 22 per cent over Rs 1,413 billion for the current fiscal year, leaving net resources with federal government at Rs 2,265 billion. The current expenditure is estimated at Rs 3,130 billion for next fiscal year, up by 6.6 per cent over Rs 1,935 billion for the outgoing fiscal year with PSDP at Rs 525 billion against downward revised target of Rs 425 billion for the current fiscal year from Rs 540 billion. The Minister said that the government plans to arrest inflation through reduced fiscal deficit and less borrowing from SBP and stated that the shift toward foreign borrowing would yield a saving of Rs 24 billion.
Finance Minister said that the government taxation proposals are finalised under six guiding principle after broad based consultation to increase tax collection and decided to withdraw exemptions allowed to various sector in phase wise elimination of SROs. Finance Minister stated that the government has decided to provide relief to Capital Market and decided to increase the CGT rate from 10 per cent to 12.5 per cent instead of 17.5 per cent. The government also announced to reduce corporate tax to 20 per cent as an investment incentive for FDI. As incentive to agriculture, the government announced exemption in sale tax on high irrigation equipments for green house farming and decided to reduce corporate tax rate to 33 per cent. Withholding tax on Marriages and function has been reduced to 5 per cent from 10 per cent, and FED and withholding tax on telecommunication sector by one per cent each and withdrew FED on telecom sector from those provinces that have imposed GST on services. Finance Minister also announced to remove income support levy.
The government imposed advance tax @3 per cent on sale of first class and club executive class air ticket, 1 per cent advance tax, adjustable, on purchase of immovable property for filers and 2 per cent for non filers as well as 7.5 per cent advance tax on domestic electricity bills over Rs 100,000. The government also proposed 5 per cent adjustable advance tax on payment of dividend and interest and 0.2 per cent additional tax on cash withdrawal, additional tax on booking with manufactures and registration of vehicles. The government also proposed an alternative corporate tax @17 per cent on accounting income and decided to enhance tax rate on services to 8 per cent. Finance Minister said that retailers have agreed to pay tax provided sale tax regime is simplified for them and the government has decided to divide them into various tiers. Those who have electricity bill less than Rs 20,000 monthly would be charged 5 per cent of the bill as sale tax on their retails while those with higher bill would pay 7.5 per cent of their bill as sale tax. Sale tax rate at Rs 7/ unit of electricity on steel sector has also been restored and taxes are being increased on tobacco.
Finance Minister also announced incentive package for textile agriculture, and various measures for export promotion. The Minister announced to establish export imports (EXIM) bank of Pakistan with capital of Rs 100 billion and initial paid up capital of Rs 10 billion to provide liquidity to the exporters. The export refinance scheme would be launched and the government through the State Bank of Pakistan has arranged to reduce the mark up on export finance from 9.4 per cent to 7.5 per cent. The government has also arranged through SBP to reduce mark up on long term financing facility for three to ten years from 11.4 per cent to 9 per cent and announced to revitalise export development fund.
Finance Minister stated that under the textile package mark up rate for export finance scheme has been reduced from 9.4 per cent to 7.5 per cent and directed the FBR to clear all the refunds within three months and extended for another two year free import of machinery for textile sector. Finance Minister also announce Prime Minister special scheme for next five years to provide skill training for textile sector at an estimated cost of Rs 4.4 billion. The government also announce credit guarantee scheme for small and marginalized farmers with disbursement of Rs 30 billion and earmarked Rs 2.5 billion for reimbursement of Rs crops loan insurance scheme premium. Allocation of Rs 500 million has been made for livestock insurance scheme and agriculture credit would be enhanced to Rs 500 billion.
Finance Minister said that sale tax on taxes is being reduced to 10 per cent and allocated Rs 20 billion for low cost housing scheme. He said hat the government would make an investment of Rs 42 billion in water sector and allocated Rs 205 billion in the development budget for power sector for various project to generate electricity. The government would establish 500 tele-centers to improve public access to ICT with Rs 12 billion and allocated Rs 30 billion for Karachi Lahore Motorway as well as Rs 113 billion for highways, roads, bridges etc Pakistan Railways would receive Rs 77 billion for current and development expenditure and HEC to get Rs 20 billion for development and Rs 43 billion for current expenditure. The government has earmarked Rs 26.8 billion for health, Dar added. Finance Minister stated the medium for public debt management.