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Budget 2020-21: Higher taxes on spending, no new income tax

Pakistan budget amount set at Rs7.3 trillion

SAMAA | - Posted: Jun 12, 2020 | Last Updated: 1 year ago
Posted: Jun 12, 2020 | Last Updated: 1 year ago

All eyes were on the Pakistan Tehreek-e-Insaf government at it unveiled its second annual budget in the National Assembly on Friday as the country battles the coronavirus pandemic, locust invasions and first economic contraction in 68 years.

Federal Industries and Production Minister Hammad Azhar presented the budget in a session chaired by Speaker Asad Qaiser. Prime Minister Imran Khan attended the session too.

Here are some of the key features of the budget:

The government has set the budget amount at Rs7,294.9 billion.

The federal budget for the financial year 2020-21 will have a deficit of Rs3,500 billion.

To provide relief to the people, there is no new tax in the 2020-21 budget. There will be no tax on coronavirus and cancer diagnosis kits and the import taxes on kids food supplement and diet food have been abolished too. Tax exemption is being given to overseas Pakistanis over the investment in saving bills, and the advance tax on auto rickshaws, motorcycle rickshaws and up to 200cc motorcycles has been abolished.

The sales tax rate for big retailers has been decreased from 14 to 12 %. The decision was taken to facilitate them because of the coronavirus outbreak.

The government has allocated Rs208 billion for the Ehsaas Programme for the alleviation of poverty and helping the poor.

The funds for higher education have been earmarked at 34 billion, while Rs 180 billion will be spent on energy, food and other sectors.

Funds worth Rs30 billion will be spent on the Naya Pakistan Housing Scheme which aims to build 10 million houses for the poor in Pakistan.

Pakistan Railways will be given Rs40 billion and Rs13 billion have been allocated for the federal government-run hospitals in Karachi and Lahore.

The welfare fund for the artistes has been increased to Rs1 billion from Rs250 million on the recommendation of the president.

For the health sector, the government has allocated Rs20 billion, while Rs20 billion for science and information projects.

The government has allocated Rs70 billion for combatting the coronavirus and other disasters and Rs80 billion for special economic zones.

This year, Pakistan has allocated Rs70bn for water projects.

Pakistan’s Defence budget for 2020-21 is Rs1.289 trillion (almost 12% higher than last year’s).

Now, people will have to show their CNICs while making a purchase of over Rs100,000. Earlier, this was applicable on Rs50,000 purchase.

The government has reduced the federal excise duty on cement from Rs2 to Rs1.75 per kilogramme.

To counter the impact of climate change, Rs6 billion will be spent.

The government will also be spending on development projects in special areas. Forty billion rupees will be spent in Gilgit-Baltistan and Kashmir, while Rs48 billion on merged districts.

The federal excise duty will be increased on e-cigarettes. The FED on imported cigarettes, ‘bidi’, and cigars has been increased to 100%, it was 65% before. The tax on cigarette’s filter rod has been increased from Rs0.75 to Rs1.

The FED on caffeine-related products is being increased from 13% to 25% to discourage their use. Excise duty has also been imposed on double cabin pick-ups.

The FED on cement has been reduced by 25 paisas to Rs1.75.

The FBR has set his revenue target at Rs3,900 billion this year. It is recommended that regulatory duties are decreased to stop the smuggling of products.

The members of the Opposition staged a protest while the budget was being presented. They chanted slogans over the sugar crisis inquiry and sacking of Pakistan Steel Mills employees.

Photo: Members of the opposition stage a protest against Budget 2020-21. Photo: SAMAA TV

Here’s what the government has done so far

The world is facing a difficult time because of the coronavirus. Pakistan is also affected by it. It hurt Pakistan’s effort to stabilise the economy, said Azhar. Lockdown, travel restrictions and other things have hurt the GDP growth rate and business. In 2019-2020, all the industries and businesses were hurt and there was a decrease of Rs3,300 billion in the GDP and the government’s non-tax revenue decreased by Rs 12 billion.

The government announced a package during the coronavirus pandemic. Rs100 billion were allocated for electricity and gas bills and Rs50 billion was allocated to provide relief to the farmers.

The government reduced the price of petrol by Rs42 per litre and of diesel by 47 per litre.

“When our government came in 2018, we were facing an economic crisis,” said Azhar. “There was no increase in exports in the past five years of the last government.”

We introduced the national tariff policy that helped Pakistani products in the international markets. Our government tried to implement the FATF action plan. “We introduced reforms in the police. We had fully implemented 14 points of the FATF action plan.”

The PTI government is bent on rooting out corruption and reviving the economy. “We trust our nation and look forward to their cooperation in meeting our set targets,” said Azhar while taking the floor of the National Assembly.

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