Significant hike in levy on petrol and diesel proposed; Govt proposes up to 25% hike in employees’ salaries
Pakistan’s budget for the upcoming year aims for a modest 3.6 per cent GDP growth, and sets an ambitious Rs13tr tax collection target, raising taxes on salaried classes and removing tax exemptions for the rest.
Meanwhile, the opposition lawmakers belonging to Pakistan Tehreek-e-Insaf (PTI)-backed Sunni Ittehad Council stood on their desks, raised slogans against government and PML-N president Nawaz Sharif. They even tore the copies of the Finance Bill 2025.
The government has set an ambitious tax collection target for the Federal Board of Revenue (FBR) at Rs12,970 billion, a 38pc increase from last year’s goal.
Inflation had surged to 38pc a year ago, with food inflation reaching 48pc, causing hardships for low-income households. I’m pleased to report that our improved economic strategy has successfully brought inflation down,” Aurangzeb said.
The government has set an inflation target at 12pc for next fiscal year, aiming to rein in prices.
The government has allocated Rs3,792.2 billion for the Public Sector Development Programme (PSDP) in FY25, a 40pc increase from last year’s Rs2,709 billion.
Govt proposes up to 25% hike in employees’ salaries
In a move to boost government employee pay, the federal cabinet approved a 25% salary increase for officers of Grade 1-16, sources said ahead of the Budget 2024-25.
A 20% increment was also approved for the salaries of Grade 17-22 employees.
Meanwhile, the federal cabinet also greenlit a 15% hike in the pensions of retired employees.
Salaried Class Tax Changes
Income between 600,000 and Rs 1,200,000 annually will now be taxed at 5%. For those earning Rs 100,000 monthly, the tax has been increased from 1,250 to 2,500 rupees per month.
Income between Rs 1,200,000 and Rs 2,200,000 annually will see a tax increase to 15%. Individuals earning Rs 183,344 monthly will now pay Rs 15,000 in income tax, up from Rs 11,667.
Annual incomes between Rs 2,200,000 and Rs 3,200,000 will be taxed at 25%. For a monthly salary of Rs 267,667, the tax has increased from Rs 28,770 to Rs 35,834.
Non-Salaried Persons: The maximum tax rate for non-salaried individuals is proposed to be set at 45%.
Significant hike in levy on petrol and diesel proposed
The federal government has proposed a significant hike in the development levy on petroleum products in its budget for the fiscal year 2024-25.
The proposal, which was presented in the National Assembly, includes an increase in the development levy on petrol from Rs 60 to Rs 80 per litre.
The finance minister presented the budget, outlining the government’s fiscal plans and strategies for the upcoming year. Among the key measures proposed, the increase in petroleum development levy (PDL) stands out, reflecting the government’s need to bolster revenue amid economic challenges.
According to the budget documents, the development levy on petrol will see a steep rise of Rs 20 per litre. This increase, from the current Rs 60 to Rs 80 per litre, is expected to generate substantial additional revenue for the government.
However, it is also anticipated to have a ripple effect on the cost of living, as transportation and production costs are likely to rise in response.
In addition to the hike in petrol, the government has also proposed an increase in the levy on light diesel oil. The development levy on light diesel oil is set to rise from Rs 50 to Rs 75 per litre. This Rs 25 increase is one of the more substantial adjustments in the proposed budget.
Meanwhile, the development levy on kerosene has been maintained at the existing rate of Rs 50 per litre, offering some respite to users of this essential fuel, often relied upon in rural and low-income households.
The federal government proposed abolishing sales tax exemptions and concessions on various items including mobile phones, copper, coal, paper, and plastic scrap.
In his budget speech on the National Assembly floor, Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb proposed a standard sales tax rate of 18 percent on various items.
The government also proposed to increase import duties on luxury cars worth over $50,000. The budget proposal also asked the House to increase the import duty on steel and paper products. The 18 percent sales tax would be applied on mobile phones, copper, coal, paper, and plastic scrap, as per the budget proposals.
A proposal has been made to increase the tax on imported mobile phones in the federal budget for the next financial year 2024-25
Govt announces discounts on solar panel
The government has unveiled a budget plan that includes a discount on importing raw materials needed to produce solar panels, inverters, and batteries.
In a bid to promote local production of solar panels, inverters, and batteries, they’ve slashed import duties on the raw materials needed to manufacture these key components.
Finance Minister Muhammad Aurangzeb highlighted that the government is offering tax concessions to support the import of plant machinery, related equipment, and raw materials necessary for the manufacturing of solar panels. These incentives are designed to foster local production and meet both export and domestic demands, thereby conserving valuable foreign exchange.
The budget document outlines that subsidies are being provided on the import of goods and components required for manufacturing solar panels, inverters, and batteries. This initiative is expected to stimulate growth in the solar industry and encourage the use of renewable energy sources within the country.
Govt to allocate Rs4 bln for E-Bikes
Senator Muhammad Aurangzeb on Friday said the federal government was allocating Rs 4 billion to promote E-bikes and Rs 2 billion for roll-out of energy-efficient fans in the country to cut carbon emissions from transport sector and increase the energy consumption.
The Finance Minister in his speech unveiling the Budget 2024-25 said Pakistan was facing adverse impacts of climate change and the government was working on initiatives to promote climate mitigation efforts.
Comprehensive Karachi Package’ announced
The federal government announced the ‘Comprehensive Karachi Package’ for uplifting the infrastructure of the port city under the Public Sector Development Programme (PSDP)..
Presenting the federal budget for the fiscal year 2024-25, Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb said that the government proposed the infrastructure development plan for Karachi, aimed at improving the city’s infrastructure.
He said that the infrastructure of the city will be developed in consultation with all stakeholders. The finance minister said that infrastructure will be brought to innovation in consultation with stakeholders.
Traders react to budget
The business community and traders representative bodies across the country reacted to Pakistan budget 2024-25 with a total outlay of over Rs 18 trillion presented.
All Pakistan Anjuman-e-Tajran, and chambers of commerce of different major cities including Karachi, Faisalabad, Sialkot and Rawalpindi rejected the budget and termed it anti-traders.
Ajmal Baloch, the President of All Pakistan Anjuman-e-Tajran, said that the government has increased taxes by 45 percent and imposed an 18 percent sales tax on mobile phones, which he said a draconian measure.
Ajmal Baloch said in the budget, the government has not announced any measures to reduce its ‘unnecessary’ expenditures. The All Pakistan Anjuman-e-Tajran president also criticised the imposition of an 18 percent sales tax on leather goods, saying it will lead to a significant increase in shoe prices. A day earlier, the government unveiled the Pakistan Economic Survey 2023-24, which showed that the economy failed to meet most of its targets set in the previous budget due to challenging conditions. The agriculture sector, however, achieved unprecedented growth.
