Salient features of Pakistan budget 2014-15

Minimum wage increased from Rs10,000 to Rs11,000

Minimum pension raised from Rs5,000 to Rs6,000

10 per cent ad-hoc relief for government employees

Grade 1-15 officers to be provided Rs1,000 fixed medical allowance

Economic growth has reached 4.14 per cent

Inflation rate was 8.6 per cent in current fiscal year

Federal Excise Duty reduced from 19.5 to 18.5 per cent

Decrease in telephone service withholding tax from 15 to 14 per cent

Per capita income of the country has increased to 1386 dollars per annum.

Fiscal deficit has been contained to 5.8 percent.

The government has proposed to levy 17% sales tax on Compressed Natural Gas (CNG).

The livestock sector growth rate has been fixed at 3.3 percent and the growth rate of agriculture sector fixed at three percent.

Federal budget proposes to contain the inflation rate at eight percent.

Value of the rupee has been appreciated by 11 percent in comparison to dollar in last seven months.

Dar said that the government focuses on increase in trade, progress of private sector, developing infrastructure, no tax exemption, cut in government expenditure, providing relief to the poor.

3 per cent tax to be levied on sale of first-class and business-class airline tickets.

He said the government has started multiple projects in order to end the energy crisis.

Dar tells his fellow MNAs that the industrial growth reached 5.84% in the outgoing year.

Foreign exchange reserves have been increased to $13.50 billion dollar and will increase to $15 billion till the end of July.

The government raised the National Income Support Programme to Rs.118 billion from Rs.75 billion.

Real Estate taxes

To document and bring into tax net the real estate transactions it is proposed that an adjustable advance tax be collected on purchase of immovable property at the rate of 1% tax for complaint taxpayers and 2 percent for non-compliant persons. The measure is expected to generate Rs 10 billion. However, properties with value less than 3 million and schemes introduced by the government for expatriate Pakistanis will be excluded. 

Relief for Government Servants

  • 10% ad-hoc relief will be allowed to all federal government employees with effect from 1st July 2014.
  • 10% increase will be allowed to those employees in Grade-1 to 15 drawing fixed medical allowance of Rs.1000 per month.
  •  5% increase will be allowed in conveyance allowance to those employees working in Grade-1 to 15.
  • The post of superintendent is being upgraded from Grade-16 to Grade-17.
  • One pre-mature increment will be allowed to employees of Grade-1 to 4.

 

The allocation for defence has been proposed at Rs700 billion for FY 2014-15.

 

Under Benazir Income Support Programme (BISP) the poor will now receive Rs1500 per month, Rs300 more compared to previous fiscal. Now 5.3 million families will be supported instead of 4.1 million.

 

The Federal Development budget is proposed to be fixed at Rs525 billion.

 

The number of customs slabs are being reduced from 8 to 6. The maximum customs duty is being reduced from 30 to 25 percent.

 

For Diamer Bhasha dam Rs10 bn had been allocated for the acquisition of land while Rs15 billion are being earmarked for the next fiscal. Funds for other dams in different provinces are also being allocated.

 

The government is allocating Rs205 billion for investment in various power projects to overcome the energy crises on priority basis.

 

Privatization of the state owned organizations will be undertaken and the proceeds will be spent for the development of the people.

 

Sindh will get Rs 464billion under National Finance Commission (NFC) Award, Khyber Pakhtunkhwa Rs283 billion and Balochistan Rs160 billion

 

In the next five years 500 new locomotives will be purchased while arrangements are being made to obtain 1500 new rail cars to facilitate the passengers.

 

Rs 77billion are being allocated for 45 differnet schemes for Railways besides salaries and pension of its employees.

 

For higher education Rs63 billion have been allocated which is 10percent higher than the previous year.

 

Through the auction of 3G and 4G technologies as many as 900,000 people will get employment opportunities.

 

Work on Karachi-Hyderabad motorway project will soon be started.

 

The foreign exchange reserves of the country will soon be raised to 22 billion dollars.

 

Estimates for 2014-15

 

Revenue collection is estimated at Rs3.943 trillion for FY 2014-15, 10 percent up compared to FY 2013-14.

 

Expenditures Rs3.937 trillion, 2 percent up compared to previous fiscal.

 

Current expenditures are estimated at Rs3.130 trillion.

 

FBR tax revenue collection is estimated at Rs2.810 trillion.

 

Allocation for Public Sector Development Programme (PSDP) for 2014-15 is Rs525 billion.

 

Fiscal Deficit will be kept to 4.9 percent in 2014-15.

 

Total foreign loans Pakistan expects to receive is Rs869 billion.

 

In the previous fiscal year 2013-14:

 

The rate of inflation was brought down to 6.8 percent.

 

Exports were raised to 21 bn dollars, registering a gain of 4.24 percent while the remittances rose to 129 million dollars.

 

 

Tax on retailers

Tier-II: All remaining retailers will pay sales tax through their electricity bills. “Retailers having electricity bills of less than Rs.20,000 in a month shall be charged only 5% of the bill as sales tax on retail sales, while those with higher bills shall be charged 7.5% as sales tax on retail sales.”

Tier-1: retailers operating as part of national and international chain stores, or in air-conditioned shopping plazas; or having machines for credit or debit cards; or having monthly electricity bills in excess of Rs 50,000, will be required to pay sales tax in the normal regime.

Proposal to make obtaining of NTN a compulsory condition for seeking commercial/industrial electricity and gas connections.

For corporations, alternate corporate tax at the rate of 17% is proposed to be imposed on accounting income.

Proposal to reduce tax liability of disabled persons having income up to Rs.1 million by 50%.

Reduction in rate of advance income tax on Shadi (wedding) functions from 10% to 5%.

Proposal to reduce corporate tax rate by 1%. Corporate tax year 2015 shall be 33%.

Sales tax on high irrigation equipment and equipment for green house farming is also proposed to be exempted.

Concessions proposed for encouraging tunnel farming by removing customs duty on import of plastic coverings and mulch film, anti-insect net and shade net.

Corporate tax rate be reduced to 20%

“With effect from 1st July 2014, Capital Gains Tax rates shall be 12.5% for securities held up to 12 months and 10% for securities held for a period which is between 12 to 24 months, whereas the securities held for more than 24 months shall be exempt from CGT.”

Federal deficit is projected at Rs.1,711billion for 2014-15.

To encourage use of tractors by farmers, sales tax on tractors to be brought down to 10% from 16%.

Finance minister announces a “Credit Guarantee Scheme for Small and Marginalized Farmers”. Scheme will benefit 300,000 farmer households with loan size up to Rs.100,000 and total disbursement of Rs30 billion.

To develop national policy for long-term sustainability of agriculture, govt has decided to establish a National Food Security Council. “The council will be responsible for ensuring policy coordination across provinces and relating to productivity improvements, market reforms, value addition and prices that ensure stable incomes for farmers.”

In view of the need to take full advantage of GSP plus facility, textile sector will enjoy duty free import of machinery for two more years.

SBP markup rate for Export Refinance Scheme to be reduced from 9.4% to 7.5% from 1st of July 2014.

Draw-back for local taxes and levies to be given to exporters of textile products on FOB values of their enhanced exports if increased beyond 10% (over last year’s exports) at the following rates: Garments 4%, Made ups 2%; and Processed fabric 1%.

Govt has decided to reduce mark-up rate on exports finance from 9.4% to 7.5%, which will reduce the financial cost of exporters by 2%.

Funding for the provincial programs for population welfare has been kept at Rs8.2 billion.

Special initiatives in the budget include the setting up of the EXIM Bank of Pakistan (Specialized DFI) to enhance export credit and reduce cost of borrowing for exporting sectors on long term basis. “The bank will provide liquidity to exporters. Its authorized capital will be Rs.100 billion while the initial Paid-up Capital will be Rs 10 billion. Legal framework for the establishment of the Bank will be developed through an Act of Parliament.”

Budget allocates Rs26.8 billion for health sector programs.

Housing

Low Cost Housing Guarantee Scheme: The government hasspecially designed a program to provide housing credit to lowcost housing units to enable the poor to have their own houses.Banks will provide loans of up to Rs.1 million and financialinstitutions, under this scheme while the government willguarantee 40% of the portfolio amount. The scheme will coverall areas of Pakistan and 25,000 loans worth Rs.20 billion will beprovided through this innovative method of supporting low andmiddle-income families.

(b) Mortgage Refinance Company:A Mortgag

e RefinanceCompany is being established with a broad shareholding of the

Government of Pakistan, Commercial Bank, DevelopmentFinance Institutions, Multilaterals and others for this purpose, togenerate long-term liquidity for housing finance. Total paid upcapital of the company would be Rs.6 billion. The company willprovide refinance facilities through purchases of loans from thefinancial institutions engaged in loan origination and packagingthem for sale to long-term investors. Government of Pakistanwill invest Rs.1.2 billion in the equity of the company.

(c) Revival and Restructuring of HBFC

:House Building Finance Company Limited has been the premier for providing housingfinance to low and middle-income families. There is an urgent need to rehabilitate this institution to enable it to play its important role in the housing sector. The following actions will be taken for this purpose: Immediate formation of Board of Directors; Improvements in efficiency and capacity; Simplification of procedures; Major drive to recover non-performingloans.

(d)PM Low Cost Housing Scheme:

In addition to above, a provision of Rs.6 billion has been kept in the budget for PM’slow income housing scheme.

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