Following are the salient features of National Budget 2017-18, announced by Minister for Finance, Muhammad Ishaq Dar in the National Assembly on Friday:
The total outlay of the budget 2017-18 is Rs 5,103 billion.
Rs one trillion historic development budget
Key features
- The total outlay of the budget is Rs4.75 trillion
- Total tax revenues target has been set at Rs4.33tr, of which the Federal Board of Revenue will collect Rs4.01tr.
- The development expenditure for next year will be Rs1.001tr.
- The defence budget has been set at Rs920.2bn.
- The minimum wage will be set at Rs15,000.
- Agriculture, SMEs and IT will be given tax breaks.
- By 2018 summers, nearly 10,000MW of electricity will be added to the national grid, eliminating load-shedding completing.
- BISP will be allocated Rs121b for 5.5 million beneficiaries.
Agriculture
- Nearly Rs1.001tr will be given out in agricultural loans next year.
- Agricultural credit will be extended at 9.9pc on Rs50,000 amount to farmers who hold 1.2m acres of land.
- Imported fertilizer will be subsidized.
- Urea will be sold at Rs1,400 per bag.
- Other fertilisers’ prices will also be kept constant through subsidies.
- The State Bank will also help link the banking system to the land record management system to facilitate farmers in securing loans.
- Tubewells will be provided subsidised electricity.
Industrials
- Zero-rated schemes for textiles, leather and other sectors will be continued.
- To promote textiles, cotton hedge trading will be introduced. A brand development fund will also be created.
- An online b2b and b2c portal for textile trading will be introduced.
- Custom duty on raw hides will be eliminated.
Housing
- Government will provide guarantees for housing loans for up to Rs1 million.
Infrastructure
- Pakistan Development Fund will be established.
- Pakistan Infrastructure Bank will be established to provide loans to private infrastructure projects.
Financial sector
- Microfinance institutions will provide loans to low-income individuals worth Rs8bn in total.
- Withholding tax on branchless banking will be eliminated.
- SMEs will be provided easy-to-access loans through a risk mitigation facility secured with Rs3.5bn from the State Bank.
Information Technology
- An IT park is being established with the help of South Korea
- New IT companies will be exempted from income tax for the first three years.
- IT exports from Gilgit, Fata and will be exempted from sales tax.
- Withholding tax on mobile phones to be reduced from 14pc and custom duty on smartphone sets will be cut to Rs650 per set.
Development expenditures
- Federal development expenditures have been increased 37pc.
- Energy and infrastructure will get 67pc of the PSDP budget. Rs411bn will be allocated for this.
Energy
- Loadshedding will be history by next year.
- Rs401bn rupees will be allocated to energy projects.
- Energy for All program will receive Rs12.5bn
- Dasu project Rs54bn.
- LNG projects to receive Rs70bn.
- Diamer Bhasha will receive Rs21bn.
- Neelum Jhelum will receive Rs19bn.
- Tarbela-IV will receive Rs16.4bn.
- Jamshoro plant will receive Rs16.2bn.
- Transmission and distribution lines from Matiari to Lahore will be builty.
Water
- Government is focusing on building dams and improvement the water distribution infrastructure.
- Rs38bn will be allocated under this head.
Roads and highways
- Rs320bn will be allocated to national highways.
Railways
- Rs45.9bn to be allocated to Railways, including for 75 new engines, 830 bogies and 250 coaches and the Peshawar to Karachi railway line.
Human development
- Rs35.7bn for Higher Education.
- Health programs will receive Rs49bn.
- Hospitals will receive Rs10bn.
- Rs12.5bn will be allocated for Clean Drinking Water for All.
- Sustainable development goals will get Rs30bn.
Gwadar
- 31 new projects, including a new airport, 200-bed hospital and desalination plants.
CPEC
- Rs180bn have been allocated for CPEC projects.
Special projects
- Rs45.6bn for projects Azad Jammu & Kashmir, Gilgit Baltistan and Fata.
Security
- All Army officers and jawans will receive a 10pc special allowance other than the salary increment in lieu of their sacrifices in Pakistan’s war against militancy.
Major heads
- Rs2,384bn to be given to provinces.
- Defence budget will be Rs920bn.
- PSDP will be Rs1,001bn
- Budget deficit will be limited to 4.02pc of GDP, contingent on spending on the ‘war against terrorism’,
Taxes
- Target to raise tax revenues to 15pc of GDP.
- Corporate sector will get relief in the form of a 30pc effective corporate tax rate.
- Islamic banking instruments like Musharika, Ijarah and Murabaha will face the same tax regime as conventional banks.
- Withholding taxes for tax filers have been cut on new car registrations. (From Rs10,000 to Rs7,500 for 850CC; Rs 20,000 to Rs15,000 for 851-1,000CC; from Rs30,000 to Rs25,000 for 1,001-1,300CC cars.)
- Threshold for availing tax deduction for education expenses to be enhanced to cover individuals with taxable income of Rs1.5m per annum.
- Individuals earning above Rs1m to be eligible for Advance Tax, compared to Rs0.5m earlier.
- Tax rate on dividends to be increased from 12.5pc to 15pc. Dividends from mutual funds are also proposed to be taxed 12.5pc, compared to current 10pc.
- Interest income to be taxed at 10pc up to Rs5m, 12.5pc between Rs5m to Rs25m and 15pc above for interest income above Rs25m.
- Single capital gains tax rate of 15pc for filers and 20pc for non-filers.
- Super Tax to be extended on the income of affluent and rich individuals, association of persons and companies earning income above Rs500m at 4pc for banking companies and 3pc of income for all others.
- Withholding tax of 5pc to be collected from cigarette producers at the time of collection of tobacco cess.
- FED on cement will be increased from Rs1 per kilogramme to Rs1.25/kg,
- Commercial import of clothing will be taxed at 6pc.
- Steel sector will be taxed on electricity consumption at Rs10.5 per unit instead of Rs9/unit.
- A special taxation regime extended to the Association for Builders and Developers will be withdrawn due to the contribution of only Rs110m in taxes to the national kitty.
- The rates of withholding taxes for non-filers on payments received for contracts, supplies and services, payments to non-residents, rental income, prizes on prize bonds and lotteries, commission, sale by auction, collection on gas bill of CNG stations and sale by manufacturers and commercial importers to distributors, dealers and wholesalers are proposed to be further enhanced. The withholding tax rates for filers will be maintained and there will be no increase for filers.
- Reduction in sales tax on supply of hybrid electric vehicles at the import stage to promote efficient motor vehicles.
- Sales tax on zero-rated sectors’ retail sales to be increased to 6pc.
- New tax on import of fabrics, which will be taxed at 10pc.
- FED on cigarettes to be enhanced.
- Regulatory Duty on chhaalia (betel nuts) to be enhanced to 25pc from the current 10pc and paan (betel leaves) to be taxed at Rs200/kg