The federal cabinet has approved the Federal Budget for fiscal year 2023-24, which was submitted to the National Assembly on 9th June. The projected budget of 14,500 billion rupees addresses critical national issues while promoting economic growth. According to reports, the administration intends to retain the budgetary deficit at 7.7% in the fiscal years 2023-24. The next fiscal year’s tax collection target is expected to be 9,200 billion rupees, with a considerable allocation of 2,800 billion rupees planned for non-tax revenue streams.
The adoption of new revenue measures in the newest budget, as well as the retention of taxes from the mid-February mini-budget, intends to increase income generation. While these measures are expected to generate significant additional money, their efficacy and influence on various sectors as well as the general economy must be continuously evaluated. It is great that the administration intends to share tax information with the IMF and expects for a smooth procedure free of obstacles. However, it is critical to determine if these policies strike the appropriate balance between income creation and possible impact on enterprises and individuals.
The ambitious revenue targets set about projected GDP growth and inflation rates may pose challenges in achieving them. The government needs to ensure that the relief measures and adjustments in income tax, sales tax, and excise duty are fair and equitable, promoting economic growth and stability. Continuous evaluation and careful implementation of these measures are necessary to ensure their success in supporting the economy and fostering a conducive business environment.
The Federal Budget for fiscal year 2023-24, also includes special incentives for overseas Pakistanis, recognizing their contributions to the nation. Notably, the government has waived the 2% final tax on property purchases made through remittances, aiming to encourage investment from abroad.
Key Points Of Budget 2023-2024
- The Federal Budget for fiscal year 2023-24 has set an economic growth target of 3.5%.
- The average inflation rate is projected to be 21%.
- The tax-to-GDP ratio is expected to be 8.7%.
- The current account deficit is anticipated to reach $6 billion by the end of fiscal year 2023-24.
- The government has allocated Rs1.8 trillion for defense spending.
- Rs1.1 trillion has been earmarked for subsidies.
- Rs761 billion has been allocated for pensions.
- The government plans to spend Rs950 billion on the Public Sector Development Program.
- The health sector has been allocated Rs22.7 billion.
- The agriculture credit limit has been increased from Rs1,800 billion to Rs2,250 billion.
- Rs30 billion will be allocated for the solarisation of 50,000 agriculture tube wells.
- All duties and taxes on imported seeds, combined harvesters, dryers, and rice planters will be waived.
- Rs10 billion has been set aside for the PM’s Youth Business and Agriculture Loans scheme.
- A subsidy of Rs6 billion has been announced for imported urea.
- Targeted subsidies have been announced for wheat flour, ghee, pulses, and rice.
- Government servants of grades 1-16 will receive a 35% increase in salaries through ad-hoc relief.
- Government servants of grades 17-22 will receive a 30% increase in salaries through ad-hoc relief.
- IT and IT-enabled services will enjoy tax-free imports of software and hardware, up to 1% of their exports with a maximum limit of $50,000.
- Freelancers with monthly exports of $2,000 are exempt from sales tax returns.
- The allocation for the Benazir Income Support Program has been increased from Rs400 billion to Rs450 billion.
- Pensions will be revised upwards, and the minimum pension will increase to Rs12,000.
- Rs10 billion has been allocated for the provision of 100,000 laptops for students.
- Import of raw materials for batteries, solar panels, and inverters will be exempt from customs duty.