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  • Prime Minister constitutes commission to probe Rs24 trillion borrowing in ten years

    Prime Minister constitutes commission to probe Rs24 trillion borrowing in ten years

    ISLAMABAD: Prime Minister Imran Khan on Tuesday constituted a commission to probe the unprecedented borrowing of Rs 24 trillion during past ten years and to set an example for those who looted the country.

    In a nationwide televised address, hours after the announcement of the national budget Prime Minister Imran Khan said, “Pakistan today was economically stable … I will now go after all of them [the leaders of PPP and PML-N] and take them to task for ruthlessly plundering the national wealth.”

    “I will make them answerable. I will investigate, and I will not spare them even if it is a threat to my life,” Imran said, after the national budget in which the government withdrew subsidies on many sectors and taxed almost all the sectors.

    The commission will comprise of officials from Federal Investigation Agency (FIA), Intelligence Bureau (IB), ISI, Federal Board of Revenue and Securities and Exchange Commission of Pakistan (SEC).

    The prime minister said that his PTI led government had present maiden budget and it would reflect the manifesto of the party.

    Talking about the latest arrests of political leaders, he said that no one ever think about these stalwarts behind the bars.

    He said that today the judiciary and National Accountability Bureau (NAB) are independent. He said that cases against PML-N leaders were not instituted by his government. “Yet they blame me for their arrests,” he added.

  • Budget 2019/2020: Measures related to sales tax, federal excise

    Budget 2019/2020: Measures related to sales tax, federal excise

    The Federal Government of Pakistan has unveiled an extensive array of budgetary measures targeting the Sales Tax and Federal Excise frameworks for the fiscal year 2019/2020.

    (more…)
  • Budget 2019/2020: Salient features of customs duty

    Budget 2019/2020: Salient features of customs duty

    ISLAMABAD: The government has announced changes in customs duty regime which included relief and revenue measures.

    RELIEF MEASURES

    1. To standardize printing and preservation of Holy Quran, import of good quality duty free Art paper is being allowed.

    2. Exemption of CD on 18 medicinal inputs/items

    3. Exemption of CD on Modular/ Particle Free Operation Theatre

    4. Exemption of CD on Medicines for certain rare diseases

    5. Incentive to promote tourism by reducing duty on pre-fabricated structures for hotels

    INCENTIVIZING LOCAL INDUSTRY:

    1. Exemption of CD on more than 1650 raw materials/industrial inputs

    2. Reduction of CD on Writing & Printing Papers

    3. Exemption of CD on Raw- materials of Paper Industry

    4. Exemption of CD on import of Wood

    5. Reduction of CD on Glass Board for LED Panel manufacturing

    6. Reduction of CD on input goods for paper based Liquid Food Packaging Industry

    7. Reduction of CD on Acetic Acid

    8. Reduction of CD on Nonwoven fabrics

    9. Exemption of CD on Machinery Parts / Accessories for Textile Sector

    10. Exemption of CD on Elastomeric Yarn

    11. Rationalization of CD on Aluminium Beverage Cans & Inputs thereof

    12. Exemption of CD on raw material for hemodialyzers used by kidney patients

    13. Tariff rationalization on Home Appliance Sector

    14. Reduction of CD on Base Oil as input for Coning Oil, White Oil and other Textile Oils

    15. Reduction of CD on Raw Material for Manufacturing of Pre-Sensitized Printing Plates

    16. Exemption of CD on Preparations for Metal Surfaces as input for Solar Panels

    17. Exemption of CD on Foundation Cloth

    18. Reduction of Duty on Wooden Sheets for Veneering

    19. Reduction of CD on Oxalic Acid

    20. Reduction of CD on Raw Material of Powder Coating Industry

    21. Reduction of CD on Raw Material for Paper Sizing Agents

    22. Reduction of CD on Bobbins & Spools of Paperboard

    23. Exemption of CD for Hydrocracker Industry for oil refining

    24. Rationalization of tariff structure for SIM card manufacturing industry

    REGULATORY DUTY:

    1. Reduction of RD on Mobile Phones

    2. Reduction of RD on smuggling prone items and other industrial inputs

    3. Reduction of RD on Tyres

    REVENUE MEASURES:

    1. Increase in rate of Additional Customs Duty for non-essential items

    2. Withdrawal of exemption on import of LNG

  • Budget 2019/2020: Rs951 billion allocated for PSDP

    Budget 2019/2020: Rs951 billion allocated for PSDP

    ISLAMABAD: The federal government has allocated Rs951 billion for development projects under Public Sector Development Program (PSDP) for fiscal year 2019/2020.

    In his budget 2019/2020 speech State Minister for Revenue Hammad Azhar said that the government has allocated Rs951 billion for federal PSDP, which was Rs500 billion in the ongoing fiscal year.

    This year, the combined allocation of national programs is Rs.1,863 billion.

    Out of this the Federal PSDP is Rs.951 billion which will be increased from Rs.500 billion.

    Policy priorities are water management, building a knowledge economy, fixing electricity transmission and distribution, low-cost hydel power generation, China-Pakistan Economic Corridor, investing in human and social development and “Public Private Partnership” in eligible sectors such as highways.

    Notable details are:

    a. Water – To better utilize our water resources the PSDP focus is on building dams and drainage projects with an allocation of Rs.70 billion. Diamer Bhasha Damshall be allocated Rs.20 billion for land acquisition, while Mohmand Dam “hydel power” will get Rs.15 billion for its ongoing construction.

    b. Road / rail networks – Some of these projects of road networks are also part of China-Pakistan Economic Corridor. Around Rs.200 billion is allocated of which Rs.156 billion is through the National Highways Authority. Key projects are:

    Rs.24 billion for Havelian-Thakot road

    Rs.13 billion for Burhan-Hakla motorway

    Rs.19 billion for Sukkur-Multan section of Peshawar-Karachi motorway.

    Additionally, “Public Private Partnership” financing mode will be utilised for construction of Chakdara-Bagh Dheri extension of Swat expressway, Construction of road from Sambrial-Kharian Motorway, and dualization of Mianwali-Muzaffargarh road.

    c. Energy –Rs.80 billion of projects shall be undertaken. For construction of Dasu hydro power Rs.55 billion are allocated.

    d. Human development / knowledge economy–Rs.58 billion are proposed in budget for human development. Health, education, attainment of development goals, and climate change are some of the key areas. For higher education record funds of Rs 43 billion are proposed to for an important sector

    e. Agriculture – While agriculture sector is administratively under the domain of the provinces, the Federal Government is investing a recordRs.12 billion for multiple projects in consultation with them

    f. Quetta development package – the government has announced second phase of “Quetta development package” for Rs.10.4 billion. This is in addition to Rs.30 billion of water and road sector projects that the federal government is financing

    g. Karachi development package –9 projects costing Rs.45.5 billion are being undertaken.

  • 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.