Following are important features of the Pakistan budget for Fiscal Year 2012-2013
Government employees salaries
The government on Friday announced 15% increase in the pay of all government employees and the personnel of armed forces, besides, revision in Basic Pay Scales 2008 by merging all ad-hoc relief allowances granted upto July 1, 2009.The government also announced 15 to 20 percent increase in the pensions of retired government employees.Finance Minister Dr. Abdul Hafeez Sheikh while presenting the federal budget proposals for the fiscal year 2011-12 before the National Assembly on Friday announced relief measures for the government employees as well as the pensioners.He mentioned the ad-hoc monthly allowance equal to 50% of basic pay was given to the government employees as well as increase in medical allowance and pension last year, and added that despite the tight financial position, the Government is aware of the difficulties being faced by the Government servants and pensioners.
In order to provide some economic relief to the civil servants as the personnel of the armed forces, the Finance Minister proposed increase in pay at the rate of 15% to all Government Employees and the personnel of Armed Forces with effect from July 1, 2011.
He further proposed that all the ad-hoc relief allowances granted upto July 1, 2009 may be merged in the Basic Pay Scales-2008 and to introduce the new pay scales.
The Finance Minister also proposed that existing Conveyance Allowance may be increased by 25% to all the employees in BPS 1-15 and their equivalent in the Armed Forces.
He said all the Civil Servants and Personal of the Armed may be allowed Conveyance Allowance at the prescribed rates irrespective of their place of duty.
The Finance Minister also proposed increase in miscellaneous allowance mostly admissible to the employees in BPS 1-15.
He also proposed Compulsory Monetization of transport facility to the Civil Servants in BPS-20 to BPS-22 of the Federal Government.
The Finance Minister said the pensioners who retired on or after July 1, 2002 may be allowed an increase at the rate of 15% in pension and those who retired on or before June 30, 2002 may be allowed an increase at the rate 20% in pension.
15 and 20 percent pension increase proposed during current fiscal year.Addressing a post budget press conference here, the Minister said “Pensioner who retired on or after 1-7-2002 may be allowed an increase of 15 percent and those who retired on or before 30-6-2002 may be allowed an increase of 20 percent.”
5 to 10% Capital Gain Tax (CGT) imposed on sale of property
The federal government, through the Finance Bill 2012-13, has imposed 5.0 percent to 10 percent capital gains tax (CGT) on sale of property and 2.0 percent capital value tax (CVT) on immovable properties in the federal capital.
Highlights of Budget-2012-13
• Total Budget volume is Rs.2,960 billion
• Gross Revenue Receipts (estimated) for Year 2012-13
Rs. 3,234 billion
• FBR sets Rs.2,381 billion tax collection target
• Rs.1,459 billion to be transferred to provinces under NFC
• Budget deficit is likely to remain at Rs.1,185 billion
• Provincial Surplus estimated at Rs.80 billion
• Rs.70 billion to be allocated for BISP
• Rs.10 billion to be allocated for Export Development Fund
• 10% additional discount at Utility Stores on differet comodities for BISP card holders
• Govt to set up 2,000 new Utility Stores, 35,000 families to get relief
• 100,000 youth to get internships, technical training
• Bachelor, Master Degree Holders to get 40,000 internships each in public and private sector
• 20,000 Graduates to be imparted skilled training to fulfil domestic and foreign demand
• Govt to pay tuition fee of PhD and Master students belonging to Balochistan, FATA, Gilgit-Baltistan
• 20% adhoc relief in pay and pension of Federal Government
• Income Tax Exemption Limit enhnaced upto Rs.400,000
• Tax on Business Turnover reduced from 1% to 0.5%
• Withholding tax ceiling for cash withdrawl from banks enhanced from Rs.25,000 to Rs.50,000
• Federal Excise Duty on 10 items abolished
• Federal Excise Duty on cement reduced from Rs.750 to 500 per metric tonn
• 18 raw materials, 9 components being used for text books, stationary exempted from Customs Duty.
• Customs duty reduced from 10% to 5% on 88 raw materials of
• Growth rate remains at 3.7 % as compared to 3.4 % during last two years
• Pakistan repay $ 1.2 billion of loans to IMF
• Sales Tax rate reduced from 17% to 16%
• Current expenditure registers 10% decrease
• Total volume of grants reaches 70% of Divisible Pool
• Parliament passes 24 laws to empower women during last four years
• Inflation reduced to 11%, next year it will be cut down to single digit
• Tax Revenues registers 46% increase, tax collection increases from Rs.1327 billion to Rs.1950 billion
• Subsidy of Rs.50 billion given on fertilizer
• Indistrial growth rate projected to 3.4% this year against
3.1% last year
• Subsidies of Rs.1,250 billion given on electricity sector during last five years
• Govt injected 3500 MW of electricity to National Grid
• Pakistan to get 2 billion cubic feet of gas from Pak-Iran Gas pipeline, Turkmenistan-Afghanistan-Pakistan India gas pipeline.
• 500 million cubic feet of LNG will be made available for consumers
• Govt gave reilef of Rs.70 billion on petroleum products
• National Economic Council approved Annual Development Plan of
• Federal Government share in Annual Development Plan is Rs.300 billion
• 200 projects completed under Public Sector Development Programme (PSDP) at a cost of Rs.300 billion.
• Govt allocates Rs.360 billion under PSDP for 96 ongoing projects
• Rs.69 billion earmarked for Electricity secton, WAPDA, Electric Companies will be given Rs.115 billion
• Rs.48 allocated for Water sector, Rs.44 billion for Social
• FATA, Gilgit-Baltistan, AJK to get Rs.37 billion
• Rs.16 billion allocated for Higher Education
• Rs.84 billion allocated for Transport and Communication (Rs.51 billion for NHA, Rs.23 billion for Railways)
• Balochistan share incrase upto 9.09% in Divisible Pool
• Govt accepted Rs.120 billion as royalty on gas sale from 1954 to 1991 for Balochistan
• Federal Government to finance 11500 jobs for Baloch youth
• Block Development Allocation enhanced up to Rs.16 billion for
• Rs.10 billion allocated for mega project in Gilgit-Baltistan
• Rs.17 billion allocated in PSDP for FATA
• Rs.12 billion for development projects, Rs.16.5 billion allocated for cuerent expenditure for Azad Kashmir besides a loan of Rs.8.5 billion
• Remittances by overseas Pakistan touch $ 13 billion mark during last two years
• Exports register 28% increase, volume touches $ 25 billion mark
PSDP envisages an allocation of Rs22.88 billion for the railway projects, Rs50.87 billion for highways, motorways and roads, Rs10 billion for ERRA projects, Rs34.56 billion for the construction of Chashma nuclear plant Nos. 3 and 4, Rs890 million for Karachi projects of 1000MW and 300MW, Rs370 billion for the re-construction of earthquake affected national highway, Rs329 billion for the restoration and expansion of Shahrah-e-Karakoram and Rs1.60 billion has been allocated for the restoration of Shahrah-e-Karakoram affected by the Attaabad lake
PSDP constitutes of Rs350 billion for federal development projects, while Rs513 billion for provincial governments’ projects.
Out of total PSDP, the federal share is Rs.350 billion, provincial share Rs.513 billion whereas Rs.10 billion would be spent for Reconstruction and Rehabilitation of Earthquake-hit areas.
Following are the main allocations in Federal PSDP:
— Rs.2177.8 million for Cabinet Division.
— Rs.791.5 million for Capital Administration and Development Division.
— Rs.135.0 million for Climate Change Division.
— Rs.653.8 million for Commerce Division.
— Rs.142.1 million for Communication Division (other than NHA).
— Rs.3205.2 million for Defence Division.
— Rs.2000.0 million for Defence Production Division.
— Rs.211.7 million for Economic Affairs Division.
— Rs.8.0 million for Establishment Division.
— Rs.25.0 million for Federal Tax Ombudsman.
— Rs.13616.0 million for Finance Division.
— Rs.200.0 million for ministry of Foreign Affairs.
— Rs.15800.0 million for Higher Education Commission.
— Rs.2591.4 million for Housing and Works Division.
— Rs.126.0 million for Human Rights Division.
— Rs.774.5 million for Industries Division.
— Rs.412.3 million for Information and Broadcasting Division.
— Rs.787.4 million for Information Technology and Telecom Division.
— Rs.195.0 million for Inter Provincial Coordination Division.
— Rs.6509.8 million for Interior Division.
— Rs.20055.2 million for Kashmir and Gilgit Baltistan Division.
— Rs.1200.0 million for Law, Justice and Parliamentary Affairs Division.
— Rs.311.1 million for Narcotics Control Division.
— Rs.495.0 million for National Food Security and Research Division.
— Rs.75.4 million for National Heritage and Integration Division.
— Rs.39167.4 million for Pakistan Atomic Energy Commission.
— Rs.400.0 million for Pakistan Nuclear Regulatory Authority.
— Rs.268.1 million for Petroleum and Natural Resources Division.
— Rs.37840.0 million for Planning and Development Division.
— Rs.325.0 million for Ports and Shipping Division.
— Rs.612.0 million for Production Division.
— Rs.2951.6 million for Professional and Technical Training Division.
— Rs.22877.3 million for Railways Division.
— Rs.806.8 million for Revenue Division.
— Rs.1311.3 million for Science and Technological Research Division.
— Rs.16000.0 million for States and Frontier Regions Division.
— Rs.140 million for Statistics Division.
— Rs.227.0 million for Textile Industry Division.
— Rs.47192.3 million for Water and Power Division (Water Sector).
— Rs.29655.0 million for WAPDA (Power).
— Rs.50727.2 million for National Highway Authority.
— Rs.27000 million for Special Programmes (PWP-I, PWP-II).
Amendments to Finance Bill (2012-13) approved by National Assembly
The government through amended Finance Bill (2012-13) has increased the number of tax slabs from five to six for the salaried class, slashed tax rate from one percent to 0.5 percent to be collected by manufacturers against sales made to dealers, distributors and wholesalers and rectified an error in the Finance Bill (2012-13) to reduce one percent turnover tax from one percent to 0.5 percent.
The amendments to the Finance Bill (2012-13) have been approved by the National Assembly here on Thursday. The said amendments would be made part of the Finance Act 2012. In budget 2012-13, the basic exemption limit has been raised for salaried and business individuals to Rs 400,000 and reduced the existing slabs from 17 to 5. Under Finance Bill (2012-13), these concessionary measures will exempt 64,420 taxpayers besides reducing the effective tax rates and providing relief to the entire salaried and business community. The FBR will suffer a revenue loss of Rs 4.5 billion by providing the relief to the salaried class.
Under the amended Finance Bill (2012-13), the FBR has increased the number of tax slabs from five to six, reducing the revenue loss of the government. The tax relief granted to the salaried persons in higher slabs would be slightly reduced under the revised slabs of the amended Bill.
The amended Finance Bill (2012-13) has given the following new six slabs for the salaried persons:- Where taxable income is Rs zero to Rs 400,000, the rate of the tax would be zero percent. Where taxable income is Rs 400,000 to Rs 750,000, the rate of tax would be 5 percent of the amount exceeding Rs 400,000; where taxable income is Rs 750,000 to Rs 1,500,000, the rate of tax would be Rs 17,500+10 percent of the amount exceeding Rs 750,000; where taxable income is Rs 1,500,000 to 2,000,000, the rate of tax would be Rs 95,000+15 percent of the amount exceeding Rs 1,500,000; where taxable income is Rs 2,000,000 to Rs 2,500,000, the rate of tax would be Rs 175,000+17.5 percent of the amount exceeding Rs 2,000,000 and where taxable income is Rs 2,500,000 and above the rate of tax would be Rs 420,000+20 percent of the amount exceeding Rs 2,5000,000.
A comparison of the 5 slabs for salaried persons proposed in the Finance Bill (2012-13) and six slabs in the Amended Bill revealed that the FBR has changed the proposed slabs rates for salaried taxpayers in the amended Finance Bill and earlier announced five slabs have now been spread into six. As per amended Finance Bill 2012, the first three slabs are same, however, by adding one new slab now it has been proposed to six instead of five.
The slab number four earlier covered the income ranging between Rs 1.5 million to Rs 2.5 million with maximum rate of 15 percent, while as per new proposed slab the income range has been squeezed to Rs 2 million. Now the new slab number four shall be ranging between Rs 1.5 million to Rs 2 million with maximum rate of 15 percent.
The slab number five earlier covered the income ranging above Rs 2.5 million with maximum rate of 20 percent, while as per new proposed slab the income range has been changed by creating slab (number five) of income range between Rs 2 million to Rs 2.5 million with maximum rate of 17.50 percent. A new slab at serial no. 6 has been added covering income ranging above Rs 2.5 million with maximum tax rate of 20 percent.
Through the amended Finance Bill (2012-13), the government has made it mandatory for all the authorities responsible for recording and registration of transfer of immovable property to withhold a minimum amount of 0.5 percent tax at the time of registration or transfer of property. Under the amended Finance Bill (2012-13), any person responsible for registering or attesting transfer of any immovable property shall at the time of registering or attesting the transfer shall collect from the seller or transferor advance tax at the specified rate. The advance tax collected under sub-section shall be adjustable and the advance tax under this section shall not be collected in the case of Federal Government, Provincial Government or a Local Government.