Pkrevenue.com

Category: Budget

This is parent category of budgets presented by Pakistan government. Here you will find year-wise federal and provincial budgets.

  • Budget 2019/2020: No SBP borrowing from July 01

    Budget 2019/2020: No SBP borrowing from July 01

    ISLAMABAD: The government has decided not to borrow from State Bank of Pakistan (SBP) from July 01, 2019 due to high inflation concerns.

    State Minister for Revenue Hammad Azhar while presenting budget 2019/2020 has said that the government would take all possible measures for minimal increase in prices.

    If, however due to movement in international markets we are forced with any price increase we will ensure that consumers are protected to the extent possible.

    Accordingly, we have made budgetary allocations to enhance social safety net for the vulnerable population.

    Fighting inflation will be paramount for us. “We will tailor our fiscal and monetary policies, coordinate with the provinces and adopt administrative measures to fight this menace.”

    The measures proposed for 2019-2020 budget shall be as follows:

    Government borrowing from the State Bank is inflationary, the government will no longer use this facility with effect from 1 July 2019

    Our medium-term inflation target will be in the range of 5 – 7 percent.

    In addition, we will continue to focus on good governance and remain committed to fighting corruption. We will assign autonomy to our institutions, strengthen their capacity and choose their leadership on merit.

    The year 2019-20 shall continue to be the period of stabilization. This is a difficult transition that we want to achieve within a minimum amount of time. We will try to minimize the adverse effects of any difficult decisions on our citizens.

  • Budget 2019/2020: Rs5,550 billion tax collection target set to reduce fiscal deficit

    Budget 2019/2020: Rs5,550 billion tax collection target set to reduce fiscal deficit

    ISLAMABAD: State Minister for Revenue Muhammad Hammad Azhar on Tuesday said that the government has set a challenging target of Rs5,550 billion revenue collection target for Federal Board of Revenue (FBR) in order to reduce the fiscal deficit.

    Presenting budget for fiscal year 2019/2020 on floor of house, the state minister said that by reducing imports and aiming for higher exports.

    “We want to bring current account deficit from $13 billion estimated this year to $6.5 billion in 2019-20,” he said.

    For increasing exports, the government will:

    Support duty structure on raw materials and intermediate goods

    Improve mechanism for tax refunds

    Provide electricity and gas at competitive cost

    Redo the Free Trade Agreements and make Pakistan part of the global value chain.

    He said that a challenging target of Rs.5,555 billion FBR revenue collection will be combined with aggressive expenditure controls to reduce primary deficit to 0.6 percent of GDP.

    Both the civil and military governments have announced unprecedented reduction in expenditure.

    He said that the government’s top priority is to enhancement of taxes.

    Pakistan has one of the lowest tax-to-GDP ratios at below 11 percent which is lower than others in our region. Only 2 million people file income tax returns – of which 600,000 are employees. 380 companies alone account for more than 80 percent of the total tax.

    There are over 341,000 electricity and gas connections – but only 40,000 are registered with sales tax.

    Only 1.4 million out of 3.1 million commercial consumers pay tax. There are estimated 50 million bank accounts but only 10 percent pay taxes. Out of 100,000 companies registered with Securities and Exchange Commission of Pakistan (SECP only half pay tax.

    Many rich do not to contribute to our taxes. This has to change in Naya Pakistan.

    Austerity shall be put in place in the regular civil and defence budgets. As a result, the running of civil government which was Rs.460 billion this year, is being budgeted at Rs.437 billion for the coming year, a decrease of 5 percent.

    The defence budget is being maintained at the last year level of Rs.1,150 billion. “In taking these difficult decisions on austerity, I want to appreciate the wisdom of the Prime Minister and the support of armed forces leadership in particular the Army Chief. Let me be clear on one point the sovereignty and defence of Pakistan is paramount.”

    All other considerations are secondary to that of national dignity and honour. We will ensure that the capacity of our armed forces to defend our country and our people is never compromised.

    Pakistan cannot develop until we reform our tax system. Historically, we have under allocated for health, education, drinking water, municipal services, and things that matter to the people. Now we are reaching a point where we have difficulty in paying our debts and even our salaries without recourse to borrowing. This situation has got to change.

  • Budget 2019/2020: sales tax zero-rating abolished

    Budget 2019/2020: sales tax zero-rating abolished

    ISLAMABAD: The government has abolished sales tax zero-rated by rescinding SRO 1125(I)/2011 for export sectors. However, new mechanism of refund has been introduced which would be paid at the time of realization of exports.

    SRO 1125(I)/2011 provides for zero-rate of sales tax on inputs and products of five export-oriented sectors i.e. textile, leather, carpets, sports goods and surgical goods.

    The objective was to resolve delay in refund payments. However, zero7 rating has created loophole and the benefit is being availed by unintended beneficiaries / non-exporters. Reduced rates for finished goods is also harming revenues.

    Huge misuse of SRO on import of fabric and processed fabrics has been reported. To streamline and prevent revenue leakage SRO 1125 is being rescinded.

    SRO 1125 be rescinded, thus restoring standard rate of 17 percent on items covered under SRO.

    The rate of sales tax on local supplies of finished articles of textile and leather and finished fabric may be raised from current 6 percent for integrated businesses, and 9 percent for others, to 15 percent and 17 percent, respectively.

    Zero-rating of utilities (gas, electricity and fuels) allowed to these export oriented sectors through various sales tax general orders be withdrawn.

    Refund of sales tax to these sectors be automated, thus ensuring that the sales tax paid on inputs is immediately refunded. Refund Payment Orders (RPOs) shall be immediately sent to SBP for payment as soon as these are generated.

    Ginned cotton which is presently exempt is proposed to be subjected to reduced rate of 10 percent

    In addition to above, it is also proposed to rescind notification No. SRO. 769 (I)/2009, dated 4th September, 2009, which grants zero-rating on import and supply of polyethylene and polypropylene for manufacture of mono filament yarn and net cloth, being similar in nature to SRO 1125, and that granting zero-rating to local supplies is to be discouraged.

  • Budget 2019/2020: salary, pension increased up to 10 percent

    Budget 2019/2020: salary, pension increased up to 10 percent

    ISLAMABAD: The government has announced increase up to 10 percent in salary and pension in the federal budget 2019/2020.

    Hammad Azhar, State Minister for Revenue presented Budget 2019/2020 on Tuesday and announced following relief measures for government employees and pensioners.

    Ad-hoc Relief Allowance at 10 percent on running Basic Pay of BPS 2017 to civil government employees in BPS grade 1 to 16, and employees of Armed Forces Civil employees BPS 17 – 20 will be given ad-hoc Relief Allowance at 5 percent.

    Civil employees in BPS 21 and 22 will receive no increase in pay as they have decided to sacrifice for the sake of improvement in economic situation of the country.

    Increase in net pension at 10 percent will be given to all civil and armed forces pensioners of federal government.

    Special conveyance allowance for disabled employees will be enhanced from Rs.1,000 per month to Rs.2,000 per month.

    Special pay admissible to SPS/PS/APS to Ministers, Ministers of State, Parliamentary Secretaries, Additional Secretaries, and Joint Secretaries will be enhanced by 25 percent.

    In addition to the above, minimum wage is being increased to Rs.17,500 per month.

  • Budget 2019/2020 at glance

    Budget 2019/2020 at glance

    ISLAMABAD: Following is the glance of budget 2019/2020.

  • Budget 2019/2020 with massive tax burden presented

    Budget 2019/2020 with massive tax burden presented

    ISLAMABAD: The present government on Tuesday presented its first budget with total outlay of Rs 7,022 billion for the fiscal year 2019-2020, registering growth of 30 percent against the revised budget of Rs 5.385 trillion for current fiscal year (2018-2019).

    State Minister for Revenues Hammad Azhar presented the budget in the National Assembly, amid protest by the Opposition parties.

    The minister said that total federal revenues have been estimated at Rs 6,717 billion which is 19 percent higher than the previous year’s revenues of Rs 5,661 billion.

    The collection of revenues by Federal Board of Revenue (FBR), he said are estimated to be recorded at Rs 5,555 billion which are 12.6 percent of Gross Domestic Product (GDP). In order to achieve the revenue collection target the government introduced massive budgetary measures across the board.

    The minister of state said out of total revenue collections, an amount of Rs 3.255 trillion would be distributed among the provinces under 7th National Finance Commission (NFC) Award which is 32 percent higher than the current year’s share of Rs 2.465 trillion.

    He said Net Federal Revenues for the upcoming fiscal year have been estimated at Rs 3.46 trillion against the revenues of Rs 3.07 trillion during current fiscal year which is 13 percent higher.

    Similarly, he said the federal budget deficit would be Rs 3.56 trillion whereas the provincial budget surplus is estimated to be at Rs 423 billion for the year 2019-2020.

  • Government borrows Rs3.2 trillion from SBP in 10 months: Economic Survey

    Government borrows Rs3.2 trillion from SBP in 10 months: Economic Survey

    ISLAMABAD: The government has borrowed Rs3.2 trillion from State Bank of Pakistan (SBP) for budget financing during first ten months of current fiscal year, Economic Survey of Pakistan revealed.

    The survey released a day earlier stated that during July 01, 2018-April 26, 2019 government borrowed Rs 1,073.0 billion for budgetary support compared to Rs 850 billion in the same period last year, of which, government has borrowed from SBP Rs 3,204.7 billion as compared to Rs 1,316.1 billion last year.

    On the other hand, government retired Rs 2,131.7 billion to scheduled banks against retirement of Rs 466.1 billion in last year. Net government sector borrowing thus remained at Rs 908.0 billion during the period under review compared with Rs 813.6 billion last year.

    During the period 01 Jul-26 Apr, FY2019 money supply (M2) increased by Rs 625.3 billion (growth of 3.9 percent) compared with Rs 601.8 billion (4.1 percent) in comparable period of last year.

    Net Domestic Assets (NDA) is the main contributor to M2 growth.

    Net Foreign Assets (NFA) point contribution is negative and stood at (-5.5 percent) during the period under review compared with (-3.3 percent) in the same period last year.

    NDA point contribution has increased to 9.4 percent compared with 7.4 percent last year. NDA point contribution growth partially offset by NFA negative growth, thus overall money supply grew by 3.9 percent during the period under review.

    On the other hand, reserve money posted an expansion of Rs 488.0 billion (growth of 8.9 percent) during 01 Jul-26 Apr, FY2019 against Rs 260.5 billion (5.4 percent) last year.

    SBP’s NDA posted a growth of 22.5 percent compared with 18.18 percent during the same period last year, whereas, SBP’s NFA decreased by Rs 743.8 billion compared with contraction of Rs 473.7 billion in the comparable period last year.

    Therefore, reserve money growth stemmed from NDA of the SBP whereas NFA outstanding stock remained negative during the period under review.

    Within Broad Money, NFA of the banking sector further contracted to Rs 882.4 billion during 01 Jul-26 Apr, FY2019. During same period last year, it was contracted by Rs 475.4 billion.

    Therefore, SBA and scheduled bank’s NFA remained negative during the period under review.

    During the period 01 Jul-26 Apr, FY2019 NDA of the banking sector registered an expansion of Rs 1,507.7 billion (growth of 9.3 percent) compared with Rs 1,077.2 billion (7.7 percent) during the comparable period last year.

    NDA of SBP increased by Rs 1,132.5 billion as compared with Rs 661.5 billion during same period last year.

    The NDA of scheduled banks witnessed an expansion of Rs 375.1 billion compared to expansion of Rs 415.7 billion in the same period of last year.

    Government sector borrowing and private sector credit mutually impacted NDA growth of the banking system, which was more than offset the contraction in NFA of the banking system.

    Consequently, broad money growth increased to 3.9 percent during 01 Jul-26 Apr, FY2019 as compared to 4.1 percent during the comparable period last year.

    Credit to Public Sector Enterprises (PSEs) increased by Rs 312.1 billion during the period 01 Jul-26 Apr, FY2019 against Rs 153.2 billion during the same period of last year.

  • Share of indirect taxes increases to 60.9 percent: Economic Survey

    Share of indirect taxes increases to 60.9 percent: Economic Survey

    ISLAMABAD: Despite claims of authorities to increase the share of direct taxes in total revenue, the share of indirect taxes further increased to 60.9 percent in 2018/2019.

    The Economic Survey 2018/2019 launched a day earlier, stated that the tax structure in Pakistan is skewed towards indirect taxes.

    The share of indirect tax to FBR tax collection remained static around 60 percent over the last one decade.

    “For fiscal year 2018/2019, the share of indirect tax collection set at 60.9 percent.”

    Within indirect taxes, sales tax posted a growth of 11.8 percent in FY2018 against 2.0 percent increase in FY2017.

    Strong aggregate demand and pass through of high international oil prices contributed in sales tax collection during FY2018.

    The share of sales tax which constituted 64.4 percent of indirect taxes during FY2018 reduced gradually from 72.3 percent in FY2014.

    Similarly, share of sales tax in total FBR tax is gradually coming down since FY2014 from 44.2 percent to 38.6 percent during FY2018.

    “For FY2019, sales tax collection target set at Rs 1,700 billion which is 14.5 percent higher than last year collection and (constitute 63.0 percent of indirect tax and 38.3 percent of FBR tax collection target).”

    The share of custom duty in indirect taxes has increased gradually from 17.6 percent in FY2014 to 26.4 percent in FY2018.

    It is pertinent to mention that the maximum statutory rates of customs duty have been gradually reduced from 125 percent in FY1988 to 20 percent in FY2016 till date.

    Consequently, the share of custom duty in FBR tax collection has reduced gradually from 45.7 percent in FY1991 to 15.8 percent in FY2018.

    Custom duty collection momentum continued with the same pace and registered a growth of 22.5 percent in FY2018 against 22.8 percent in FY2017.

    High aggregate demand, increase in general income level, high imports, higher commodity prices, exchange rate depreciation and fiscal measures such as regulatory duties on non-essential imports and an increase in additional custom duty by 1 percent led to increase in growth of custom duty.

    Custom duty collection is estimated at Rs 735.0 billion for FY2019 which reflects an increase of 20.8 percent over last year actual tax collection.

    On the other hand, the share of federal excise duty in indirect taxes declined by 9.3 percent in FY2018.

    The tax base of Federal Excise Duty (FED) contracted over the years and now is restricted to only few commodities like cigarettes, cement, beverages, and international travel etc. Share of FED in total FBR tax collection has also fallen from 10.1 percent in FY2009 to 5.6 percent in FY2018.

    FED registered a growth of 7.9 percent in FY2018 compared to 5.2 percent in FY2017. Collection from cement mainly fueled this growth momentum. FED is projected to Rs 265.0 billion which is 24.1 percent higher as compared with actual last year collection.

    The projected share is 6.0 and 9.8 percent of FBR and indirect tax collection, respectively for FY2019.

  • PIA implements business plan to improve financial health

    PIA implements business plan to improve financial health

    ISLAMABAD: Pakistan International Airlines Corporation (PIAC) has implemented strategic business plan to improve its financial health, according to Economic Survey 2018/2019 launched a day earlier.

    It said PIA came into existence in 1955 as Public Sector organization.

    However, in April 2016 it was converted from a statuary organization to a company governed by Companies Act 1984, through Pakistan International Airlines Limited (PIAL conversion) Act 2016.

    At present PIA is passing through a dire financial state. However, the present government is very keen to make itself-reliant.

    Efforts are underway to improve the financial health of the corporation by reducing its losses through various means and modes. Stringent action is being taken against corruption and mismanagement.

    Despite financial constraints and tough and uneven competitive environment, PIACL gave a stable performance during 2018.

    To reduce losses, PIA had to take measures like route rationalization and suspended its loss making routes.

    PIA is in the process of its Strategic Business Plan 2019-23 to improve its performance:

    i. Launching of profitable new routes like Silakot-Sharjha, Lahore-Muscat, Islamabad-Doha and Lahore-Bangkok-Kualalalmpur. These routes are going very strong and economically viable

    ii. More new routes have been started which include; Sialkot-Paris-Barcelona, Peshawar-Sharjha, Peshawar-Al Ain and Multan-Sharjha

    iii. Increasing frequencies and capacity on profitable routes like Jeddah and Madinah coupled with closure of loss making routes like New York, Salalah (Oman), Kuwait, Mumbai

    iv. Stoppage of all officiating and extra allowances given on additional assignments to officials

    v. Ban on overtime allowances in all cadres along with monitoring of flights by senior officials

    vi. Increasing regularity and punctuality of flights by assigning target to be achieved 90 percent

    vii. Improvement in flight services, training of crew and regular monitoring

    viii. Introduction of executive economy class on European and Gulf sectors which are attracting more customers

    ix. Rationalization of fares according to market demand thus helping in increase of seat factor

    x. Delays of flights have been cut down significantly by better planning in engineering, flight operation and ground handling departments

    xi. Special emphasis on cargo business with monitoring of performance, rationalization of cargo fares and more effective liaison with all stakeholders

    The survey said PIA is in process of acquiring new aircraft for its fleet. Presently, a tender has been floated for four narrow body aircrafts according to PPRA rules.

    PIA has submitted its business plan to the federal government and now it is under consideration for approval of Federal Cabinet.

  • FBR to force all NTN holders for filing tax returns

    FBR to force all NTN holders for filing tax returns

    ISLAMABAD: Federal Board of Revenue (FBR) has chalked out a comprehensive plan to broaden the tax base by enforcing tax returns in the case of all National Tax Number (NTN) holders.

    According to Economic Survey 2018/2019 released on Monday said that the FBR would take following measures to broaden the tax base:

    — Creation of a central data bank

    — Enforcement of return in the case of all NTN holders

    — Preparation of directory of non-filers deductees

    — Data to be obtained from NADRA, Telecom Cos, Banking Cos, Development Authorities, Schools, Clubs, Hotels etc

    — Data of suppliers/buyers of sales tax returns of 5,000 big companies

    — Raising expenditure on revenue collecting machinery from 0.8% to 1.5% of total revenue

    — Registration of persons subjected to withholding of sales tax

    — Registration of retailers under the new scheme introduced under Special Procedure Rules.

    — Deployment of Technology to Identify Risk Areas to Support Risk Based Audit

    It said that an audit plan has been reintroduced to accompany the self-assessment scheme and to overcome weak tax compliance.

    Substantial progress has been achieved for infrastructure upgradation and development with the introduction of the fully Inland Revenue Information System (Iris), which is available to all the field formations.

    A paradigm shift from simple random selection to Parametric Computer Ballot selection of cases and finally risk based selection in audit has been introduced. Moreover, litigation against General Audit Policies was successfully defended before different Courts of Law.

    Under the reform initiatives, Draft Audit policy for the Tax Year 2017 is under consideration and will be finalized after due deliberation/consultation with all concerned.

    Moreover, Risk-based Audit Framework is being devised to ensure a more targeted and focused approach with the help of World Bank. Training modules have been prepared to import Investigative Audit Training to officers with the help of World Bank.

    In order to promote tax culture, compliance and to dispel the general impression about evading taxation by individuals having prominent position in the society, FBR has under taken following initiatives for bringing a behavioral change regarding the tax culture perception in the society:

    a) Publishing Tax Directory of Parliamentarians

    b) Establishment of Financial Investigation Cell

    c) Campaign against Tax Evaders

    To simplify procedures and minimize contact between the taxpayers and the tax collectors, FBR management has made revolutionary changes in automation of tax procedures. Major achievements include:

    i. Web Based One Customs (WeBOC) System of Clearance

    ii. EDI – Electronic Data Interchange

    iii. National Single Window (NSW)

    iv. iv. Inland Revenue Information System (Iris)

    Current initiatives

    − Creation of Tax Policy Unit within Ministry of Finance

    − Identification and scrutiny of evasion by High Net worth Individuals

    − Administrative measures to increase tax collection by identifying untaxed wealth overseas and by data matching to identify non-filers

    − Practical steps taken to curb Offshore Tax Evasion (UK and UAE properties, Panama and Paradise Leaks, etc.) and continuous monitoring of such cases

    − Plaza Mapping at Lahore, Karachi and Islamabad

    − Launch of Device Identification, Registration and Blocking System (DIRBS) to control smuggling of mobile devices

    − Introduction of Currency Declaration System and Advanced Passenger Information System at major airports of the country

    − Discouraging imports of luxurious goods through additional Regulatory Duties (RDs)

    − Addressing under invoicing by signing MOU with China for exchange of pricing information

    − Forensic audit in Sugar, Tobacco and Steel Industries to address leakages and tax evasion and in these industries

    − Implementation of Tobacco Track & Trace System

    − Resolving pending litigation

    − Collection of pending arrears identified as collectable arrears

    − Resolving 1.2 million automatically selected cases for audit U/s 214D

    These reforms will start paying dividends in shape of improved compliance, higher revenue growth and improvement in tax-GDP ratio.

    The tax revenues have increased significantly during last four years. The collection jumped from Rs 1,946 billion in FY2013 to Rs 3,844 billion in FY 2018, registering an overall growth of 97.5 percent.

    Similarly, tax-GDP ratio of the country which was just 8.7 in FY2013 jumped to 11.1 in FY 2018.

    With the help of these initiatives, FBR is moving towards a more efficient tax system; facilitating taxpayers, promoting investment and broadening the tax base in the years to come. It is envisioned that these resource mobilization efforts will result in further improvement of domestic tax revenues in coming years.