What happened: The budget for the fiscal year 2021-22 which rolled out on June 11 has been labeled as pro-growth with an overall focus on increasing expenditures. This is what Shaukat Tarin the Federal Minister of finances promised during his tenure, a revival and improvement in the growth rate of the economy. The budget focuses on investing in development and increasing the provision of subsidies. The government through the budget is going to increase employment and pandemic support measures while managing fiscal imbalances. Although these goals are similar to those featured in the previous budget it is important to note that this time around the government has achieved some fiscal space to implement more coherent and extensive pro-growth measures.
Key priorities: The government’s priorities for the next year can be seen as promoting wide-ranging and sustainable economic growth. A Pro-poor initiative and social safety net through the expansion of the Ehsaas Programme. Reduction in inflation and price controls. Increased development spending (with a budget of Rs.1,168 bn) on job creation and initiatives such as Kissan Programmes, Kamyab Jawan. Moreover, they will focus on the alleviation of Covid-19 and an extension of the Stimulus Package. There will be an emphasis on revenue mobilisation without new taxes and, power subsidies (Rs.682bn), and circular debt financing. They will facilitate expatriates’ remittances and savings through Roshan Digital Accounts, Pakistan Remittances Initiatives, and other schemes. Furthermore, the government will also support the housing sector and construction industries through the Naya Pakistan Housing Scheme and SME support programmes. The government has allocated Rs.479bn to run the civil government. An Rs.480bn to pension payments of both retired army officers and civilians and the defence budget of the country has been allocated Rs.1,370bn
What is getting cheaper and what will be more expensive: The regulatory duty on the import of cocoa paste, butter and powder will be reduced meaning a decrease in the prices of chocolate products and baked goods. Locally manufactured having an engine capacity of 850cc or less and electric cars will be exempted from value-added tax (VAT), four-wheelers will be exempted from federal excise. The Federal Excise Duty (FED) on mobile phone calls that are longer than three minutes has been set at Rs1 per call, Rs0.1 on every SMS, and Rs5 on every GB of internet data. However, FED will not be applied to internet data. Electronically heated tobacco products (e-cigarettes) will also be taxed. The federal excise duty on telecommunication will be reduced by 1pc from 17pc. FED will be reduced on fruit juices. Consumers whose electricity bill is Rs25,000 or more and who are not on the ATL will have to pay withholding tax. The withholding tax on cash withdrawals and non-cash banking transactions and domestic air travel will be removed.
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