Govt likely to allocate Rs1,000b for Covid-19

ISLAMABAD: The federal government has prepared draft for Rs7,570 billion federal budget 2010-21. The draft will be finalized in the first ten days of June and will be sent to federal cabinet for approval.

The budget will be presented in the parliament on June 12.

According to sources in the Ministry of Finance, Rs1,000 billion is also expected to be allocated for dealing with coronavirus pandemic and for providing relief to the business community.

In the budget, salaries and pensions of government employees are likely to be hiked by 20 percent. In addition, two ad hoc reliefs are expected to be integrated in the salaries.

A proposal for relief on import of machinery for agriculture and energy projects is under consideration. The budget is expected to reduce customs and excise duties on imported machinery by up to 3%.

Tax collection target in the budget is likely to be Rs4,500 billion while development budget is expected to be Rs530 billion.

It may include a special incentive for construction industry. A proposal to allocate more than Rs200 billion under public-private partnership for development projects is under consideration.

The sources said a meeting of federal cabinet will be held on June 2.

In the meeting, budget proposals will be presented. However, before presenting the budget, Prime Minister Imran Khan will continue to hold regular budget briefings before June 12.

The sources said the federal government has decided to increase total volume of next budget by 10%.

The budget is likely to have a deficit of up to Rs3,000 billion.

Tax rate on essential food items is likely to be reduced but a luxury tax of Rs100,000 to Rs 200,000 is likely to be levied on big houses, mansions, bungalows, farm houses and properties in Islamabad. A proposal to levy luxury tax per square foot is under consideration.

It is proposed to give the authority to collect this tax to the Excise and Taxation Department. However, tax will not be levied on widows.

The budget proposes to levy luxury tax of Rs100,000 on two to four kanal houses, mansions and bungalows and farm houses with an area of 6,000 square feet located in Islamabad while Rs200,000 on houses and farm houses larger than five kanals and with covered area of 8,000 square feet.

In addition, farmhouses have been divided into two categories for the implementation of luxury tax. Farmhouses up to four kanal are proposed to be exempted from luxury tax.

However, in the first category, it is proposed to levy a luxury tax of Rs25 per square foot on farmhouses with a covered area of 5,000 to 7,000 square feet, while farmhouses with a covered area of 7,001 to 10,000 square feet will be taxed at Rs40 per square foot.

It is proposed to levy a luxury tax of Rs50 per square feet on farmhouses with a covered area of more than 10,000 square feet.

In the second category, a tax of Rs60 per square foot would be levied on farmhouses having a covered area of 5,000 to 7,000 square feet and Rs70 per square foot on a farmhouse with a covered area of 7001 to 10,000 square feet.

In addition, a proposal to levy a luxury tax of Rs80 per square foot on farmhouses with a covered area of more than 1,0001 square feet is under consideration.

It has been decided to introduce a comprehensive centralized loyalty programme to provide more incentives to overseas Pakistanis sending remittance, under which debit cards and loyalty cards will be issued to overseas Pakistanis while smartphone based incentive products will be introduced.

A special app like Vouch 365 will also be introduced.

Under this loyalty programme, children of overseas Pakistanis will be given 50% discount in the Overseas Pakistanis Foundation (OPF) schools and colleges.

A special quota will be set aside for them in housing schemes. They may also be allowed a waiver of immigration fees and insurance premiums and registration fees. Frequent flyer cards will also be issued.

According to the sources, tax proposals are being finalized in the proposed budget under which the Federal Board of Revenue’s (FBR) proposal for relief on import of machinery for agriculture and energy projects is under consideration.

Customs and excise duties on imported machinery are likely to be reduced by up to 3%. More relief will be provided in the budget due to the coronavirus.

Regulatory and additional customs duties are also expected to be reduced by up to 2 per cent, while a reduction in duty on imported machines is being considered for other sectors as well.