What Actually New Budget 2023-24 Is For ???

June 10, 2023 / By Zunair Tahir / Pakistan News

The budget for fiscal year 2023–24, like the majority of recent budgets, places a significant emphasis on borrowing money to finance expenditures, despite the fact that a sizable portion (more than 50%) of current expenses go towards debt payment.

Despite a narrative that indicates otherwise, the process taken to create this year’s budget wasn’t particularly novel, but some of the actions were.

The government has significantly raised the amount of money that may be sent from outside Pakistan without any questions being asked about the source, which is one of them.

A “bar on asking nature and source of unexplained income/assets” is proposed to be placed on this ceiling, which would be raised from Rs5 million to $100,000 (approximately Rs30 million). This action is most likely an effort to increase the nation’s diminishing foreign exchange reserves, which are now less than $4 billion and barely cover a month’s worth of imports.

In an effort to stop the flow of dollars out of the nation, the administration has also suggested raising the withholding tax rate on payments made to “non-residents through debit/credit or prepaid cards” from 1 to 5 percent. If this proposal were to be ultimately accepted, all foreign online purchases (including those from Netflix and Amazon) would become more expensive.

Another new initiative put up by the finance minister aims to make it easier for small and medium-sized businesses (SMEs) to receive bank loans.

Ishaq Dar brought up a central bank program that allows SMEs to refinance their debts at a 6 percent markup during his address. But he emphasized that banks are reluctant to lend to SMEs since they frequently lack a credit history.

The finance minister stated that this will be fixed by the government taking up 20% of the risk for loans made to SMEs under this program.

The budget for this year also included incentives for IT experts and services, giving Pakistani freelancers who provide IT services to overseas businesses the status of a cottage industry. Therefore, independent exporters won’t need to submit a sales tax report.

Additionally, “old and used vehicles of Asian makes above 1300cc” imports are no longer subject to set duty and tax ceilings.

This implies that reconditioned 1300cc automobiles from China and Japan, which have a considerable market in Pakistan, would probably cost more. Smaller vehicles like the Mira and Alto would not be impacted by this change.

Additionally, “old and used vehicles of Asian makes above 1300cc” imports are no longer subject to set duty and tax ceilings.

The budget offered, among other important sales tax or customs duty exemptions:

Customs tariffs on nappy and sanitary product raw components are exempt.
Customs charges on prawns, prawns and juveniles imported for breeding in industrial fish farms and hatcheries are exempt.

The prohibition on buying second-hand clothes has been lifted. The exemption of contraceptives and their accessories from sales tax.

For nonresident individuals who possess a National Identify Card for Overseas Pakistanis/Pakistan Origin Card and purchase real estate using foreign remittances sent from overseas, there is a 2 percent final withholding tax exemption.

For a builder, a 10% tax liability reduction or Rs. 5 million, whichever is less, and for a person, a 10% tax liability reduction or Rs. 1 million, whichever is less, for three years of self-construction of a home.

In contrast, there were several actions that may affect the average person’s finances:

The elimination of the sales tax exemption for foods sold in large quantities under brand names or trademarks.

An increase in the lower rate of sales tax on supplies produced by point-of-sale shops selling leather and textile items from 12 percent to 15 percent.

The suggested tax rate for electric power transmission services is 15%.

0.6 percent advance adjustable withholding tax will once again be applied to cash withdrawals made by inactive taxpayers.

An increase in the rate of withholding tax on payments made to non-residents using debit, credit, or prepaid cards from 1 percent to 5 percent. (Taxpayers who are not active pay two to ten percent).

It is suggested to impose a federal excise levy of Rs 2,000 per energy-inefficient fan and Rs 20 per cent of the value on incandescent bulbs.

What Actually New Budget 2023-24 Is For ???

READ MORE NEWS…

Comments

You Want To Have Your Favorite Car?