Salient Features of The Budget 2018-2019
Salient Features of The Budget 2018-2019: The new Federal Finance Minister Miftah Ismail yesterday presented the 6th budget of the PML-N government with a total expenditure of Rs 5.932 trillion. This year’s budget is the first one under the chair of Prime Minister Shahid Khaqan Abbasi.
Here are the salient features of the Budget 2018-2019:
Fiscal Deficit
This budget is targeting fiscal deficit [income-expenditures gap] of 4.9%, equivalent to Rs.1.890 trillion. This would be funded by domestic sources [banks and non-banks] of Rs.1.548 trillion while Rs.342 billion would be arranged from external sources.
The provinces would throw surplus of Rs285.6 billion, to control the increasing deficit.
PSDP
Rs.800 billion for federal Public Sector Development Program (PSDP) allocated in the budget with three-fifth proposed to be spent on infrastructure projects including China-Pakistan Economic Corridor (CPEC).
Defense Expenditure
Defense expenditures have been reserved at Rs.1, 100 billion (Rs1.1 trillion)
Pension & Pays
An increase of 10% in salaries and pensions of the government employees with minimum pension is raised from Rs.6,00 to Rs.10,000. Rs 15,000 have been fixed for pensioners who are over 75 years of age. Family pensions have also been increased from Rs 4500 to 7500.
House Rent
The House rent ceiling and house rent allowance have also been increased by 50% percent each. The government has also proposed an allocation of Rs.12 billion for the provision of advance to government servants for house building and purchase of transport facility.
Performance Allowance
The government has also set aside Rs.5b for senior officer’s performance allowance.
Miscellaneous Items
The government has fixed the GDP growth target of 6.2 % and contains inflation below 6 % in 2018/19.
- Petroleum levy has been fixed on petrol, diesel, kerosene, light diesel at Rs.30 per liter. It would increase prices in the local market.
- To promote Real Estate Investment Trust (REIT), the rate of tax on dividends issued to the unit holders by REIT has been reduced from 12.5% to 7.5%.
- Tax credits facility allowed for establishing a new industrial undertaking purchase of machinery through equity and extension, expansion and BMR of machinery has been extended to June 2021.
- On import of coal, tax has been reduced to 4% from 5.5%on companies and 6% on individuals.
- Welfare institutions like Aziz Tabba Foundation, Saylani Welfare International Trust and Al-Shifa Eye Hospital have been exempted from income tax.
- Budget has imposed Rs.1000 for income between 0.4 million to 0.8 million a year; and Rs.2000 on income group earning Rs0.8 million to 1.2 million a year.
- Printers and publishers of holy Quran have been exempted from sales tax and custom duty on printing paper.
- For gas distribution companies, sales tax on import of LNG and supply of RNG has been reduced to 12 pc from existing 17pc.
- In agriculture sector, sales tax on fertilizers has been reduced from existing 5pc to 3pc. Sales tax on supply of natural gas to fertilizers plant for use as feed stock has been reduced to 5pc from existing 10pc.
- Sales tax on fish feed has been removed that was earlier 10pc.
- In order to promote local computer assembling and manufacturing of laptops and computers, 21 types of computer parts have been exempted from sales tax that are imported by manufacturers.
- Second-hand clothes and shoes have been given exemption of value addition tax (VAT) which is currently 3%.
- Federal excise duty on locally produced cigarettes has been enhanced in respect of Tier-1, TIER-2 and TIER-3 to Rs.3964, Rs.1770 and Rs.848 per thousand cigarettes respectively.
- Cancer treatment drugs have exempted from customs duties at import stage.
- Regulatory duty on import of optical fiber cable has been reduced from 20% to 10%.
- In order to encourage tourism, customs duty on import of Pre-fabricated structures complete rooms, not locally manufactured has been reduced from 20%to 11% for setting up of new hotels / motels in hill stations (including AJK and Gilgit Baltistan), coastal areas of Baluchistan.
- Custom duty on charging stations for electric vehicles has been withdrawn which currently 16%. Custom duty on import of electric cars is reduced from 50% to 25%. These electric cars have also been exempted from regulatory duty of 15%.
- For Benazir Income Support Program (BISP) funds has been increased from Rs.121 billion to Rs.124.7 billion. Quarterly stipend per family has been increased from Rs.3, 000 to Rs.4, 834.
As the Labor Day is approaching, laborers and unskilled workers are not that happy with the budget tall claims.
“The price of a roti has risen to Rs. 8-10,” says a rickshaw driver. “How can a poor man afford it? This is injustice.” “Nothing for the poor there,” says a hopeless laborer.
Laborers and unskilled workers have not placed much confidence in the government as far as budget 2018-19 is concerned. While the opposition party members have termed the step of government, appointing the finance minister in an emergency and then presenting the budget just before government departure on 31st May, constitutionally unethical.
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