A federal budget draft with over Rs6 trillion deficit has been prepared. It will be presented in the cabinet on Friday (today) for its approval and later in the day in parliament.
It carries a proposal of imposing new taxes worth Rs700 billion. The total outlay of the budget is expected to be Rs14.5 trillion. The government employees are likely to receive a boost of 30% in their ad hoc relief allowances and a 20% hike in pensions.
It has also been suggested that government employees’ medical and conveyance allowance should be increased by 100%. The fiscal deficit target has been set at 7.7% of the GDP.
A revenue collection target of Rs 9.2 trillion has been estimated. The Federal Board of Revenue (FBR) will be assigned a target of generating revenue at Rs2.8 trillion, 55% of which will be transferred to the provinces.
The federal government plans to spend a sum of Rs950 billion on development. Rs200 billion will be spent on launching new projects under the public-private partnership mode.
The total provincial development budget has been allocated at Rs1.55 trillion.
A sum of Rs1.8 trillion has been proposed for defence.
Besides, the FBR will be expected to collect an additional amount of Rs1.9 trillion in the upcoming fiscal year.
According to sources, new taxes will be imposed on the property sector and company profits. The rate of levy on petroleum products is likely to be increased further. A standard rate of 18% sales tax will be imposed in the budget.
A sales tax of 25% will be charged on luxury items. It is proposed to increase the rate of duty on imported vehicles with a capacity greater than 1,000cc. It has been decided to tax more than 30% on mutual funds and real investment trusts for non-filers.
Increasing the withholding tax on imported luxury goods has also been proposed. It has also been decided to double the withholding tax for non-filers engaged in property sector transactions.
Three proposals related to salaries and pensions of government employees are under consideration in the budget.
A 100% increase in medical and conveyance allowances for government employees has been suggested.
Besides, a 10% increase in their salaries as an ad hoc allowance has been proposed.
It has been suggested to increase the pensions by 10%. It has also been proposed to increase the medical allowance of pensioners by 100%.
The second proposal is to increase the salaries of all government employees from Grade one to Grade-22 by 25%, apart from hiking their medical and conveyance allowances.
