Each year the federal government of Pakistan rolls out a financial budget for the upcoming fiscal year, which starts from 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 allocated for the annual budget by the federal government.
The Ministry of Finance has finally announced the forecast of the expenditures, revenues, and economic reforms for the upcoming fiscal year in the form of the federal budget 2021-22. PM Imran Khan already hinted about good news (for the general public) in the budget before it was presented in the National Assembly by Finance Minister Shaukat Tareen on June 11, 2021.
Exemption from duties, reduction in taxes, and increase in pension and minimum wages; it seems like what the prime minister said was right, the federal budget 2021-22 has been announced to set the wheels of the economy in motion with a total outlay of 8.4 trillion rupees ($53.93 billion).
Mentioning ‘Economy is back on track!’ in a recent tweet, the Finance Minister Mr. Shaukat Tarin praised the government’s robust economic policies. This is what the tweet says:
Now, without further ado, let’s take a look at a quick summary of the federal budget 2021-22 and how it will benefit the common man.
Key Highlights of Federal Budget 2021-22
Some of the biggest and most prominent reforms recently introduced in the form of the financial budget for the upcoming fiscal year have been listed below. Take a look!
- Currently, Pakistan is approaching the International Monetary Fund (IMF) for its $6 billion bailout package, setting a growth trajectory of 4.8% of the Gross Domestic Product (GDP) for the upcoming fiscal year.
- After the implementation of the proposed economic reforms, large-scale manufacturing (LSM) in the country is expected to grow by 6%.
- To ease some pressure on the national economy, the government has earmarked PKR 3,060 billion for repayment of outstanding debts in the form of loans and interest payments.
- The tax collection target for the Federal Bureau of Revenue (FBR) has been set at PKR 5.8 trillion for FY22. It is more than the tax collection target in FY21, which was PKR 4.7 trillion.
- Focusing on the growth of the country’s agriculture and livestock sector, an amount of PKR 12 billion has been allocated for the emergency agriculture programme.
- There is good news for people investing in the stock market as well. The capital gains tax on the disposal of securities has been reduced from 15% to 12.5%.
- A total amount of PKR 98 billion has been set aside by the Ministry of Planning, Development & Special Initiatives (PDSP) for the transformation plan of Karachi, Pakistan’s largest city and biggest economic hub.
- “The withholding tax (WHT) on 12 sectors, including banking, will be withdrawn,” said Finance Minister Shaukat Tarin.
- A budget of PKR 14 billion has been allocated for the Billion Tree Tsunami project.
- New tax exemptions introduced on oxygen cylinders, and auto-disable syringes as well as the paper used for Quran publication.
- Reduction in import duties of active pharmaceutical ingredients (APIs).
- The government is also planning to tax the capital gains worth PKR 5 million or above on sales of immovable properties to generate billions of rupees as additional tax revenue in the upcoming fiscal year. According to Mr. Tarin, the purpose of bringing property income under the normal tax regime is “to make a complex tax system a simpler one”.
What Budget 2021-22 Has in Store for Wage Earners, Salaried Individuals, and Entrepreneurs?
- This budget is a sigh of relief for salaried individuals as no new tax has been implemented on the salaried class. Here’s how to calculate the tax on your salary.
- The newly introduced budget has raised the minimum wage in the country from PKR 17,500 to PKR 20,000 per month for the upcoming fiscal year.
- A staggering amount of PKR 682 billion has been earmarked for subsidy expenditures.
- An amount of PKR 1.37 trillion has been allocated for the country’s defence budget, which accounts for 16.1% of the total financial budget.
- Salaries and pensions of employees of the federal government will be increased by 10% in the fiscal year 2021-22.
- Tax liability reduced for women entrepreneurs by 25% in the upcoming fiscal year.
- Interest-free business loans up to PKR 500,000 to be introduced by the government in the fiscal year 2021-22.
Budget 2021-22 and the Auto Sector
- According to the federal government, another thing that directly impacts families belonging to the lower-middle-class section of society is the rising prices of locally assembled and manufactured cars with limited engine capacity, making them almost unaffordable. This is why in the financial budget 2021-22, the ‘Meri Gari’ scheme has been launched, according to which, small vehicles with an engine capacity of up to 850cc may be exempted from excise duties and value-added tax the sales tax rate will also be brought down from 17% to 12.5%.
- The import of electric vehicles (EVs) has also been exempted from the value-added tax in the financial budget of the upcoming fiscal year.
These were some of the key highlights of the federal budget announced for the 2021-22 fiscal year. So, what do you think about the government’s recently introduced economic reforms and policies? Let us know by emailing us at firstname.lastname@example.org. We’d love to hear your thoughts on this really important subject.
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