Tuesday, July 16, 2024

Government Unveils Budget 2023-24 Key Features and Highlights

Overview

Pakistan Government yesterday unveiled the budget for the fiscal year 2023-24. Some of the Key features and highlights of the budget 2023-24 are as follows:

Budget 2023-24 Key Features and Highlights

Finance

The Finance Minister Ishaq Dar has presented the annual budget for 2023-24 setting the target of 3.5% GDP growth for the upcoming year. The total budget is 14 trillion approx. $50.4 billion with high inflation.

According to the budget 2023-24, the total expenses of the country are around PKR. 13,320 billion rupees for the next year starting from July 1, 2023. The total gross revenue estimated for the next year is around PKR. 12,163 billion rupees.

Education

The allocation of the educational budget for the next fiscal year 2023-24 has drawn the attention of people towards itself. The Government will provide PKR. 97.098 billion for education affairs and services. The budget is revised from the last year with an increase of 5.5%.

In the current year, the lowest educational funding is observed. So, there is a need to invest a high amount to meet the challenges and gaps in the educational sector.

Around PKR. 76.589 billion are supposed to spend on tertiary educational affairs and services. However, PKR. 4.468 billion are designed for pre-primary and primary educational affairs and services.

PKR. 3.698 billion is designed for the provision of administrative support services. The purpose is to address the administrative needs of the overall educational system.

Higher Education Commission

The Government has also focused on financing the higher education system. For HEC, they have allocated PKR. 59.71 billion under the public sector for 2023-24. The purpose of this budget is to support the higher education institutions in the country.

Agriculture

In the annual budget for the fiscal year 2023-24, the target budget for agriculture loans is increased from PKR.1800 billion to PKR. 2250 billion. Its proposals contain a 20% tax rate on the banking companies for providing additional loans. Also, this tax will apply to importing fishing and hatcheries.

To encourage textile exports, a 5% tax is removed on the local synthetic yarn. Also, a 1% final tax will be applied via online platforms.

PKR. 6 billion subsidies are provided for importing Urea and PKR. 10 billion is an additional amount to provide small loans to the landlords in cooperation with the provisional government.

PKR. 10 billion for loans for five years to the rural areas will be provided having annual turnover more than 800 million.

Public Sector

The government has also announced a series of relief measures in various public sectors. They have allocated around PKR. 1400 million in this domain. From the reports, it is said that the designed amount is for the 10 ongoing projects and three new schemes for the Ministry of Law and Justice.

Also, there is the ease in duties on importing essential products. Investment and industrialization are also encouraged in the 2023-24 budget.

The government has designated PKR. 450 billion for the BISP program for the next year 2023-24. If you compare it with the past year, the amount is increased as last it was 408 billion.

Telecom services

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Tax reduction/increment on telecom services vanished from the Budget 2023-24. However, the actual story is that last year, the tax on telecommunication services increased from 16% to 19.5%. now, the Govt has reduced FED (Federal Excise Duty) from 19.5% to 16%.

Salaries and Pensions

There is good news for Government employees and ex-employees of all grades, as the Govt has made a significant increase in their salaries. The employees from 1 to 16 grade will get 35% raise in their salaries. However, the employees of 17 grade and up will get a 30% increase in their salaries.

For the pension holders, there is a 17.5% increase in their pensions. By this the minimum pension amount of PKR. 10,000 has been increased to 12,000.

Stock Market

According to the preliminary analysis of topline securities, the budget 2023-24 is neutral for the local stock market. Some of its salient features are:

  • The govt has kept the CGT at the current levels and the tax is also the same on the dividends as per the reports.
  • Also, the companies that come under PSX have the minimum liability on turnover from 1.25% to 1.0%.
  • 10% final retained tax will be re-imposed on bonuses shares by the companies however, it will be 20% for non-ALT.

Information and Technology

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According to the Budget for the fiscal year 2023-24,

  • TELCO has suggested implementing a 5G policy in the country with a free spectrum for five years.
  • There will be a 0% tax on the import of 5G devices. Also, the import and production of 2G and 3G products will be banned.
  • Duties on mobile phones will be reduced. Its purpose is to increase the number of mobile phone customers a result generating significant revenue.
  • To improve the potential of IT export in the country.

Power production and transmission Departments

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There is a significant change in the budget for the fiscal year 2023-24 for the power production and transmission departments. The tax collection authorities are transferred to the provinces to produce power and its distribution in the country. This step will improve the harmonization of sales tax in the country. The decision is taken through the finance bill 2023 passed on June 9, 2023.

EndNote

From the 2023-24 budget for the next year, there are fewer benefits for private sector employees. Even billions of dollars will make no difference in improving the economic stability of the country if the political condition of the country remains unstable.

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