ISLAMABAD: The Federal Government on Tuesday announced its second annual budget for fiscal year 2014-15 with a total outlay of Rs 3.945 trillion introducing various welfare schemes for farmers, homeless, the unemployed, businessmen and 10 per cent relief for the government employees.
Minister for Finance Ishaq Dar presented the budget in the National Assembly session chaired by Speaker Sardar Ayaz Sadiq. Prime Minister Muhammad Nawaz Sharif also attended the session.
Among the prominent relief measures proposed by the government included 10 per cent ad hoc relief for the salaried and pensioners, significant increase in allowances, Rs 1000 increase in minimum pension and Rs 1000 surge in minimum wage.
Spelling out the revenue generation plans of the government, the minister said the share of provincial governments in the taxes would be Rs 1.72 trillion against Rs 1.41 trillion last year.
Dar said the net resources left with the Federal Government would be Rs 2.22 trillion against the revised estimate of Rs 2.18 trillion for last year.
He said the expenditure for the next fiscal had been budgeted at Rs 3.937 trillion, 2 per cent higher than the previous year’s, which was much lower than the inflation rate.
He said the current budget was estimated at Rs.3.13 trillion and the PSDP at Rs 525 billion showing an increase of nearly 24 per cent.
The minister said the budget deficit had been reduced to 4.9 per cent and estimated at Rs 1.71 trillion for the next fiscal year.
By requiring surplus of Rs 183 billion last year, the government had projected an overall fiscal deficit of Rs 1.422 trillion for the next year, he added.
Terming the tax collection by the previous government the worst, Ishaq Dar said the tax regimes would be simplified and inequities created by SROs-based concessions and distortionary provisions would be removed through a phased plan.
The Finance Minister said the privileges granted to the influential class were being withdrawn with the introduction of a simple, transparent and equitable tax structure.
He said the government would not put any additional burden. It would rather tax the income and expenditure of the effluent class to help increase tax to GDP ratio, reduce budget deficit and divert more resources for development.
Narrating the relief measures proposed in the next budget, the minister said the thrust was to promote growth and equity.
The engine of growth would be the private entrepreneurship, he said and added that all measures were being taken to promote it across the board from SMEs (small medium enterprises) to the large scale industrial undertakings.
He said before finalising the tax proposals, the government carried out extensive consultation with all the stakeholders.
The Finance Minister said to ensure continued stability in stock market, it was proposed that from July 1, 2014, the CGT rate would be 12.5 per cent for securities held up to 12 months and 10 per cent for those held for 12 to 24 months.
Finance Minister Ishaq Dar said in order to attract foreign investment in manufacturing, construction and housing sectors, it has been proposed that corporate tax rate be reduced to 20 percent if the industrial undertaking or a construction or housing project to be set up by June 30, 2017 and at least 50 percent of the total project cost in form of equity through FDI.
The government, he said, has also proposed concessions for encouraging tunnel farming by removing customs duty on import of plastic coverings and mulch film, anti-insect net and shade net.
Exemption of sales tax on high irrigation equipment and equipment for green house farming has also been proposed, he he added.
Ishaq Dar said that it has been proposed to reduce the corporate tax rate by one percent. Therefore, for fiscal year 2014-15, the corporate tax rate shall be 33%.
The minister said at present, the rate of advance income tax on functions and gatherings is 10%. Marriage functions at Marriage Halls are becoming a norm and 10% rate is creating hardship even for the middle class. It has been proposed to reduce the rate from 10% to 5%, he added.
The government, he said has also proposed to reduce tax liability for disabled persons having income up to Rs.1 million by 50%.
The Finance Minister said it has been decided to withdraw FED from those provinces which have imposed GST on telecom services.
In areas where FED shall continue to be collected, the rate is proposed to be reduced from 19.5% to 18.5%. Furthermore, it has been decided to reduce the rate of Withholding Income Tax on telephone services from 15% to 14%, he said.
He said the public at large did not accept removal of income support levy as it was considered harsh and was perceived as double taxation. Therefore the government has decided to accept the demand and it was proposed to repeal the Income Support Levy Act, 2013, he added.
The government, he said has also proposed that airlines may collect advance tax of 3% on the sale of first class and club/executive class air tickets if the passenger is a compliant taxpayer, and 6% tax if the passenger is a non-compliant person.
The passengers travelling through the economy class shall be exempt from this tax to ensure that working classes and students travelling to foreign destinations are not burdened by this measure, he announced.
Announcing the relief measures for government employees, pensioners and labours, the finance minister said a 10% ad-hoc relief will be allowed to all federal government employees with effect from July 1, 2014.
He said 20% increase will be allowed to those employees in Grade-1 to 15 drawing fixed medical allowance of Rs.1000 per month.
Fifty percent increase will be allowed in conveyance allowance to those employees working in Grade-1 to 15, he remarked.
He said the post of superintendent is being upgraded from Grade-16 to Grade-17 while one pre-mature increment will be allowed to employees of Grade-1 to 4.
For welfare of the labour class, and in line with the increase in pay of government employees, the minimum wage rate has also been proposed to increase from Rs.10,000 to Rs.12,000, he announced.
Ishaq Dar said that last year minimum pension for government employees had been increased from Rs 3000 per month to Rs 5000, representing an increase of 67%.
Considering the difficulties faced by low pension employees, the government also proposed a further increase of Rs 1000 in minimum pension to make it Rs 6000, he said.
This, he said means that the minimum pension has been doubled since July 1, 2013, he said adding that a 10% increase in pension will also be allowed to all retired federal government employees- APP
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