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Govt unveils Rs7tr budget for FY20 amid opposition protest

SAMAA | - Posted: Jun 11, 2019 | Last Updated: 1 year ago
Posted: Jun 11, 2019 | Last Updated: 1 year ago
Govt unveils Rs7tr budget for FY20 amid opposition protest

The Pakistan Tehreek-e-Insaf government unveiled its first annual budget in the National Assembly on Tuesday. It was presented by State Minister for Revenue Hammad Azhar. 

The session was chaired by Speaker Asad Qaiser.

Here are some of the key features of the budget:

The government has set the budget amount at Rs7,036 billion.

The total revenue collection target has been set at Rs6716.6 billion, of which Rs5,822.2 billion will be generated through the federal tax collection.

The government has decided to reduce civilian spending 5% from Rs460b to Rs437b.

Defence spending will not be increased. It will be kept at last year’s Rs1,152b.

Seventy-five percent of power consumers use less than 300 units. They will be given a subsidy. The government has allocated Rs200b for this.

A new ministry will be formed to provide social safety to the poor, jobless, widows. The government is starting a ration card scheme for healthy nutrition. One million people, especially mothers and children, will be covered.

Eighty thousand deserving people will get interest-free loans.

The Benazir Income Support Project stipend will be increased from Rs5,000 to Rs5,500

The government has decided not to borrow money from the State Bank of Pakistan.

The government has allocated Rs1,800 billion for development, including Rs950 billion for federal development programs, including water, supply and transmission and distribution of electricity.

The government has allocated Rs45.5 billion for nine development projects in Karachi.

Also, Rs93 billion have been set aside for education, health, nutrition and water.

The government has contacted foreign investors to run the Pakistan Steel Mills. It also expects to earn around Rs1 billion through mobile phone licenses.

The government has allocated Rs152 million for the development and uplift of the newly merged tribal districts in Khyber Pakhtunkhwa.

The government will spend Rs431b on itself, that is for government salaries and other running expenses.

Government employees (grades 1 to 16) will get a 10% ad hoc allowance. Grade 17 to 20 employees will get a 5% ad hoc allowance. There will be no increase in the salaries of Grades 21 and 22 employees. The civilian and army pensioners will get a 10% raise in their pensions. The cabinet members have agreed to lower their salaries 10% on the suggestion of PM Khan.
The government will spend Rs701 billion on development (read roads, schools, hospitals, power plants etc). This is less than 10% of the budget.

The government is once again facing a big deficit since its expenses far exceed its revenues. In fiscal year 2019-2020, it will face a loss of Rs3,151.2 billion, which is 7.2% of the GDP. This means, after collecting all taxes and other income, the government will need to borrow Rs3,151.2 trillion to meet its budgetary needs. This money will come in the form of loans.

Members of the opposition are protesting in the NA during the budget speech.

The government has lifted the ban on non-filers to buy properties. They will now be able to buy property worth Rs5 million or more.

Taxable income for salaried persons has been set at Rs600,000. For the non-salaried people, it is set at Rs400,000 per annum.

The minimum wage rate has been set at Rs 17,500.

An amount of Rs20 billion has been allocated for the Diamer-Bhasha dam and Rs15 billion for the Mohmand dam.

As far as the NFC Award is concerned, provinces are to be given Rs3,255 billion. Azhar did not reveal the share of each province.

The treasury members, including Faisal Vawda, Sheheryar Afridi, Amjad Niazi and Ali Amin Gandapur, have surrounded Prime Minister Imran Khan to protect him amid protest by the opposition parties.

GST to remain unchanged at 17%.

Duty on cold drinks has been increased to 13.2% from the previous 11.5%.

The federal excise duty on a 1,000cc car is now 2.5%, 5% for 1,000cc to 2,000cc cars and 7.5% on cars over 2,000cc.

Suppliers of meat, vegetables, and wheat, used in the making of food, usually resort to tax evasion. To discourage them from doing so, tax on material supplied to restaurants and bakeries is being reduced from 17% to 7.5%.

There are different tax rates for powdered milk. It is being proposed to have a 10% uniform tax on items such as powdered milk, non-flavored milk and cream.

The previous 3% value addition tax on mobile phone imports will be abolished.

For CNG dealers, the tax rate will be rationalised. For value region one, it will be increased from Rs64.80 per kg to 74.4 per kg and for value region two, it will be increased from Rs57 per kg to Rs69 per kg.

Sales tax on sugar to be increased from 8% to 17%. This will result in a price increase of Rs3.5 per kg. It is being proposed to have a sales tax of 17% on processed meat and food because it is usually consumed by those with higher income.

Tax of Rs1 per kg on ghee and cooking oil will be abolished. Instead, the federal excise duty on these products will be increased to 17%.

Keeping in view the health hazards posed by syrups and non aerated drinks, a 5% duty will be imposed on them while the federal excise duty on cement will increase from Rs1.5 per kg to Rs2 per kg.

The federal excise duty on tobacco is being increased from Rs4,500 per 1,000 sticks to Rs5,200 per 1,000 sticks for the top slab while the the last two slabs are being merged and Rs1,650 per 100 sticks FEDwill be imposed on it.

Fresh graduates are to get tax credit. The tax rebate will be given to the employers of these graduates so they can pass the benefit on to the graduates. Any one who graduated after June 1, 2017 will be considered a fresh graduate.

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Defence, Budget, PTI, PM Imran Khan, Hammad Azhar, development, budget 2019-2010
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