The Rs14.5trillion Fiscal Year 2023-24 budget released by FM Ishaq Dar has “no new taxes.”

• FM Ishaq Dar’s FiscalYear24 budget, which totals Rs14.5 trillion, has “no new taxes.”

Finance Minister Ishaq Dar recently presented the budget for the fiscal year 2023-24 (FY24) in the National Assembly. The budget focused on the real economy and aimed to address the challenges faced by the country. This article analyzes the key proposals and highlights the economic situation of Pakistan.

No New Taxes and GDP Growth

One of the significant announcements made by the finance minister was the absence of new taxes for the upcoming year. This decision aims to provide some relief to the public. The GDP growth target for FY24 has been set at 3.5 percent, which the minister considers a modest target. It is important to note that this budget is not an election budget but instead focuses on the real economy.

Attention to Agriculture Sector

Recognizing agriculture as the backbone of the economy, the budget places special attention on this sector. Several measures have been introduced, including an increase in agri loans from Rs1.8 trillion to Rs2.25 trillion. Additionally, customs duties on the import of seeds for sowing have been exempted to promote growth in the agricultural sector.

Key Proposals in Budget 2023-24

The budget introduces various key proposals, including:

1. No increase in duties on import of essential items.
2. Exemption of customs duties on import of seeds for sowing to promote agriculture.
3. Withdrawal of capping of fixed duties and taxes on the import of used vehicles of Asian Makes above 1300CC.
4. Taxation of services provided by restaurants, cafes, food parlors, etc., at 5% when payment is made through electronic means.
5. Exemption of sales tax on contraceptives and accessories.
6. Proposed minimum wage of Rs32,000 and increased wages for government employees.
7. Increase in withholding tax rate from 1% to 5% on payment to non-residents through electronic means.
8. Exemption of customs duties on import of shrimps/prawns/juvenile for breeding in commercial fish farms and hatcheries.
9. Allocation of Rs1 billion for health insurance of working journalists.

Expenditure, Revenue, and Fiscal Deficit

The budgeted current expenditure for FY24 stands at Rs13,320 billion, representing a 53% increase from the previous year. Defence expenditure is budgeted at Rs1,804 billion, accounting for 1.7% of GDP. Debt servicing, the largest expenditure, has increased by 85% to Rs7,303 billion.

The total revenue budgeted for FY24 is Rs12,163 billion, with a tax collection target of Rs9,200 billion for the Federal Board of Revenue (FBR). The fiscal deficit for FY23 is estimated at Rs6,923 billion, representing 6.54% of GDP.

Economic Challenges and Inflation

The budget acknowledges the economic challenges faced by the country, with inflation being a significant concern. The government has set a target of 21% inflation for the next fiscal year, following last year’s high inflation rate of 28.2%. The finance minister emphasized the need for “painful steps” for economic rehabilitation, recognizing the potential impact on poverty and inflation.

Public Sector Development Programme (PSDP)

The budget allocates Rs2,709 billion for the Public Sector Development Programme (PSDP) in FY24, a 25% increase from the previous year. The federal and provincial PSDP have been allocated Rs1,150 billion and Rs1,559 billion, respectively.

To read more: Government allocates funds of Rs. 2000 for Sons, Rs. 2500 for Daughters on Birth

The FY24 budget presented by Finance Minister Ishaq Dar focuses on the real economy and addresses the challenges faced by Pakistan. The absence of new taxes aims to provide relief to the public,