Each year the federal government of Pakistan rolls out a financial budget for the upcoming fiscal year, which starts on the 1st of July of the current year and ends on the 30th of June of the next year. Despite a struggling economy, trillions of Pakistani rupees are set aside for the annual budget by the federal government.
The Ministry of Finance has finally announced the forecast of expenditures, revenues, and economic reforms for the upcoming fiscal year in the form of the federal budget 2022-23. Finance Minister Mifta Ismail said that the budget was announced at a difficult time, so the government had to take tough decisions to ensure the country’s economic development and growth during the “hard times” ahead.
Now, without further ado, let’s take a look at a quick summary of the federal budget 2022-23 and how it will affect the common man.
Key Highlights of Federal Budget 2022-23
The federal budget for FY 2022-23 was presented with an outlay of PKR 9.5 trillion. Here’s a quick look at what it entails:
- Salaries of the government employees are to be increased by 15%.
- There would be no tax for individuals who are earning up to PKR 100,000 per month
- Government proposes subsidies on commodities like wheat and sugar.
- Taxes on vehicles with engine power over 1,600cc to be increased
- The tax rate for pensioners to be reduced to 5% from 10%
- Remittances will now be subjected to advance withholding tax.
- Taxes on the banking sector are to be increased to 42%.
- Families that have a monthly income below PKR 40,000 will be given PKR 2,000 per month.
- Households who have a consumption of fewer than 200 units of electricity per month are to be offered loans in easy instalments for the installation of solar panels.
- Tax-to-GDP ratio has been set at 9.2%.
- A total of PKR 699 billion is set aside for targeted subsidies in the new fiscal year.
- A total of PKR 1.52 trillion has been allocated to Defence expenditures.
- FBR tax revenue target has been set at PKR 7 trillion.
- An additional tax of 2% has been levied on those who earn PKR 30 million annually.
Some Other Noteworthy Changes in Economic & Taxation Policies Announced in Financial Budget FY 2022-23
Due to the shortage of funds and strict IMF policies to comply with, the federal government has cut down on subsidies and announced reversals in a few taxation policies, impacting key industries.
- There would be a reduction in power sector subsidies. With a decrease of 4.4%, the allocation for power sector subsidies has been kept at PKR 570 billion as compared to the current year’s allocation, which is PKR 596 billion.
- Another key announcement in the budget is regarding the reversal of tax and subsidy-related incentives that were announced for the construction and real estate sector in the previous budget.
- Owners of more than one immovable property with a value above PKR 25 million shall be paying tax equivalent to 1% of the fair market value of their real estate possessions.
- Moreover, the advance tax rate for filers on real estate transactions has also been raised from 1% to 2%. On the other hand, the advance tax rate for non-filers who intend to buy real estate has also been revised and increased to 5%.
These were some of the key highlights of the federal budget announced for the 2022-23 fiscal year. So, what do you think about the government’s recently introduced changes in economic and taxation policies? Share your thoughts at email@example.com. We’d love to know about your point of view on this very important subject.
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