Budget 2023-24 Pakistan: Everything You Need to Know

Budget 2023-24 – Federal Finance Minister Ishaq Dar is perhaps one of the most unenviable person in the world. On the one hand, he is trying to fulfill the demands of International Monetary Fund (IMF) while at the same time trying to win the hearts and minds of Pakistanis suffering from historically high inflation. In addition, he is trying to increase revenue by reducing expenses, which means insufficient budget for development projects and subsidies.

Mentioned below are the most important points of the new federal budget 2023-24: 

Autos Updates (Budget 2023-24)

• The customs duty on lithium-ion batteries is now 0%.
• 35% customs duty on the import of car parts/components.
• Customs duty reduced from 10% to 5% on non-localized (CKD) of Heavy Commercial Vehicles (HCVs).

Salary / Pensions (Budget 2023-24)

• Government officers of grade 1 – 16 grade salary increment of 35%.
• Government officers of grade 17 – 22 grade salary increment of 30%.
• An increment of 17.5% in pension.
• Minimum salary increased from Rs.25,000 to Rs.32,000.

Social Services (Budget 2023-24)

• Rs.450 billion allocated for the Benazir Income Support Programme.
• Rs.10 billion allocated for 100,000 laptops for youth.
• Rs.5 billion allocated for women empowerment.

Properties/Real Estate

• Tax relief of 10% or Rs.5 million on the business income of builders for the next three years.
• Tax relief of 10% or Rs.1 million for the next three years for construction projects that start after July 1, 2023.

Miscellaneous

• Withholding tax on card transactions outside Pakistan increased from 1% to 5%.
• Exemption of customs duties on the import of machinery, equipment, and inputs of solar panels.
• Removal of regulatory duty on IT-related equipment.
• Services tax for restaurants, such as cafes, food parlors (including those serving ice cream), coffee houses, coffee shops, eateries, resorts, and similar establishments that offer cooked, prepared, or ready-to-eat food services, is 5% when customers opt to make payments through debit or credit cards, mobile wallets, or QR scanning.
• 0.6% Withholding tax on cash withdrawals over Rs.50,000 for non-filers.
• FED on telecommunication services reduced from 19.5% to 16%. 
• Over 15% increase in the Defense budget – Allocation increased from Rs.1,563 billion to Rs.1,804 billion.

Is this budget any good? Like all previous budgets, it has its pros and cons. Let’s examine them quickly. 

Pros

• 3.5% GDP growth target.
• Measures for clean and green energy.
• Measures for the revival of the construction sector.
• Sales tax exemption on contraceptives.

Cons

• Unrealistic growth target.
• Not enough relief provided to the people due to debt servicing and IMF restrictions. 
• No out of the box solutions to bring people out of poverty.

Also Read: How to save money? 8 simple ways to save money:

Quick Analysis

The government of Pakistan claims that the country’s economic growth in the fiscal year 2022-23 is 0.3%. However, this figure is disputed by many international financial institutions (IFIs) who claim that Pakistan’s real growth rate is negative. Expecting a jump from 0.3% to 3.5% seems unrealistic. Also, given that Pakistan’s population growth rate is about 2%, achieving economic growth of 3.5% may not have a significant impact on the lives of the average Pakistani.

The main concern for the average Pakistani is surviving the current economic downturn, which is being felt in the form of historic inflation rates. However, the main goal of the government seems to please the IMF and the voters, two rival forces. Therefore, this budget cannot be considered purely people-friendly or treasury guidelines.

Also Read: Federal Budget 2023 – 2024: What To Expect and Strategies for Financial Survival