Finance Minister Dr. Miftah Ismail on 10th June 2022 presented the Federal Budget in the Parliament House for the fiscal year 2022-23 and no one opposed as like previous years during the presentation of Budget speech. The total federal budget covers for about Rs 9502 billion.
Key Features of the Federal Budget
General Public
Government made subsidies on Utility Stores for fiscal year 2023 which consists upon Rs. 17 billion rupees, salaries of government employees are increased by 15% while for pensioners increase is 5%.
IT and Telecom
- Federal excise duty on Balance recharge increased from 16% to 19.5%.
- Import Levy has been increased on mobile phones. More details are available here.
- The government has imposed taxes on software exports and all other IT exports.
- Rs. 17 billion allocated for the Information and Technology sector.
Auto Sector
- Advance Tax has been increased from 100% to 200% for non-filers on the purchase of luxury cars with engine capacities of over 1600cc.
- Duties on import of hybrid cars have been decreased by 100%, 50% and 25% on 1200cc and above, 1800cc and above, and 2500cc and above, respectively.
- Capital gains tax has been imposed when selling of cars worth over Rs. 5 million.
Income Tax
- The minimum salary eligible for income tax has been increased to Rs. 1.2 million as compared to Rs. 0.6 million to facilitate the salaried class.
- Income exempted for Association of Persons (AOP), Business Individuals has been increased to Rs. 0.6 million from Rs. 0.4 million.
- Income tax on Behbood certificates, Pensioners’ account certificates have been decreased to 5% from 10%.
- Fixed income and sales tax to be charged from small retailers. This tax will be collected through electricity bills. Amount Rs. 3-10K.
- Initial 100% depreciation allowed for Industrial units as compared to 50%.
- Properties having a value of Rs. 25 million will have to pay 1% income tax on rental income, which will be equal to 5% of the fair amount of the property. This tax will not be applicable to a personal residence.
- 15% capital gain tax to be charged on immovable properties sold under one-year holding period.
- Advance tax for filers for property transactions has been increased to 2% from 1%. And the same has been increased to 5% for the non-filers.
Fiscal Targets
- The GDP target is set at 5%.
- Inflation target set at 11.5%.
- Fiscal deficit to be targeted at 4.9% of GDP in FY23.
- Exports & Imports target at $35 billion & imports at $70 billion.
- The current account deficit was targeted at 2.2% of GDP as compared to the 4.1% deficit of FY22.
- Remittances are expected at $33.2billion in FY23 as compared to $31.1 billion in the last year.
- Rs. 3,950 billion for debt servicing has been allocated as compared to Rs. 3,144 billion in FY22.
- Targeted subsidies at Rs. 699 billion.
- Total tax collection target at Rs. 7,004 billion as compared to Tax collection of Rs. 6,000 billion in FY22.
Education
- Rs. 65 billion has been allocated to Higher Education Commission (HEC).
- The complete higher education budget has been increased from Rs. 108.65 to Rs. 109 billion. The government’s claim of 67% increase has turned out to be fake.
- Rs. 21 billion has been allocated for an increase in the production of crops and livestock.
- Youth employment policy program will be started for the fresh graduates of Pakistan with 25% women quota.
- Free laptops are to be distributed on merit among students.
- Rs. 51 billion has been allocated for Higher Education projects.
Media Sector
- Filmmakers are to be given tax exemptions for the next five years. Exports rebate will be provided on movies and dramas exports for the next 10 years.
- Distributors & film producers are to be exempted from the imposition of an 8% withholding tax. Along with this, customs duty on the import of machinery for the entertainment industry will be abolished.
- Sales tax on import of media and entertainment industry slashed to zero to promote media & entertainment industry.
Banking Sector
- The banking sector is to be taxed at 42% from the current taxation of 39%.
- Payments made through debit, credit, and Prepaid cards to a foreign country would be charged with 1% & 2% advance WHT for filers and non-filers.
- Banks will provide cheap financing for the purchase of solar panels for households using less than 200 units of monthly electricity.
Allocations
- Rs. 10 billion has been allocated for the improvement of climate projects.
- Sales tax on solar panels imposed has been removed.
- Rs. 202 billion has been allocated for the Transport & Communications sector.
- Allocation for Benazir Income Support Program (BISP) has been increased to Rs. 364 billion as compared to Rs. 250 billion in the last year.
- Public Sector Development Program (PSDP) allocation set at RS. 800 billion.
Agriculture Sector
- 5% sales tax on tractors abolished to zero.
- Sales tax on import of Sun flower, Cannola, wheat, seeds has been abolished.
- Custom duty on agriculture machinery has been abolished.
- Customs and additional customs duties along 400 tariff lines have been rationalized.
- More than 30 pharmaceuticals API have been exempted from customs duty.
