Govt imposes Rs415bn new taxes in budget 2023-24

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 ISLAMABAD: In the budget year 2023–24, the federal government included Rs415 billion in additional levies in an effort to get the International Monetary Fund (IMF) loan.

Ishaq Dar, the finance minister of Pakistan, concluded his speech on the budget by stating that "Pakistan has agreed on Rs215 billion taxes after three days of negotiations with IMF officials to conclude the 9th review under the EFF, pending due to the country's external financing gap."

He added that the Federal Board of Revenue's new revenue target has been set by the government at Rs 9.415 trillion. Prior to it, on June 9, 2023, the finance minister declared that the FBR income target would be Rs 9.200 trillion in 2023–2024.

On the other hand, he stated that in the next fiscal year, the province contribution will increase from Rs 5.276 trillion to Rs 5.390 trillion.

The finance minister also stated that Pakistan will reduce operating expenses by Rs 85 billion, which would not affect the anticipated development budget, salary increases, or pension benefits for federal employees.

He said that the government's discussions with the IMF were completely sincere, and he guaranteed the legislature that all information would be made public after the matter had been resolved by posting the agreement on the Ministry of Finance's official website.

Additionally, he said that the federal government's projected pension costs climbed from Rs.761 trillion to Rs.801 trillion in 2023–2024, from Rs.14.460 trillion to Rs.14.480 trillion.

In addition, he said that grants would now be estimated at Rs 1.405 trillion and subsidies at Rs 1.064 trillion, and that all of these actions would reduce the total budget deficit by Rs 300 billion [Rs 215 billion in taxes and Rs 85 billion in reduced operating expenses].

According to sources, the government has placed an extra 2.5% tax on people whose yearly income is above 2.4 million

Similar to this, sources said, the government increased the tax on the sale and acquisition of real estate by 1% and levied a 5% Federal Excise charge on fertiliser.

The Finance Minister added that the super tax has been made more progressive and will now be applied to all industries or categories, as opposed to the previous restriction of only 15 sectors.

According to the finance bill, the FBI will now levy a 1 percent super tax on income between Rs 150 and Rs 200 million, 2 percent on income between Rs 200 and Rs 250 million, 3 percent on income between Rs 250 and Rs 300 million, 4 percent on income between Rs 300 and Rs 350, 6% on income between Rs 350 and Rs 400, 8% on income between Rs 400 and Rs 500, and 10% on income above Rs 500 million across all sectors or categories.

He said that we had planned to reinstate the advance adjustable withholding tax on cash withdrawals from banks by non-ATL people over Rs 50,000 at a rate of 0.6 percent. 

In addition to enabling FBR to include an increasing number of individuals in the tax net, this would aid in the recording of the economy, Dar said.

A 10 percent withholding tax on bonus shares issued by corporations was also declared by him. Additionally, he added that this tax will be paid by the shareholders rather than the business.

He stated that the government will implement windfall gain tax while preserving the enabling provision in the Finance bill when it believes that certain industries rather than specific people have achieved unusual profit as a result of outside forces.The Petroleum Development Levy on Diesel and MOGAS would now get Rs60 per litre as opposed to Rs50 per litre, according to the finance minister.

We have decided to provide Rs 80 billion to assist the remittances of Pakistanis living abroad since they are a valuable resource, he said.

The government will implement a contributory pension fund system due to an unprecedented increase in the cost of pensions, he added, adding that we have created a pension fund in the budget for 2023–2024.

He said, "Pension expenditures have reached an unsustainable level, so we will need to implement reforms."