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PTI govt to role out its first Federal Budget for 2019-20 today




The Pakistani Tehreek-e-Insaf (PTI) government is set to present on Tuesday evening its first Federal Budget for the year 2019-2020.
The Budget 2019-2020 will be presented by Minister of State for Revenue, Hammad Azhar in the National Assembly in Islamabad. According to a notification, the NA has already been summoned for the presentation of the federal budget, local media reported.
The parliament session has been convened to meet at 5 pm. The copy of finance bill 2019-20 will also be presented before the Senate at six pm today.
Through this budget, the PTI aims to ensure economic stabilization and provide economic stimulus for sustainable growth. The budget will have special emphasis on austerity, fiscal discipline, external sector management and protecting the poor.

Government to present around Rs6.7 trillion budget today

ISLAMABAD (Dunya News) – The Pakistan Tehreek-e-Insaf (PTI)-led federal government, amid much criticism from the opposition parties over ‘ineffective economic policies’, is all set to present its first federal budget for the upcoming financial year 2019-20, with an approximate outlay of Rs6.7 trillion, in a session of the National Assembly (NA) in Islamabad on June 11 (today).
The budgetary proposals will be presented in the National Assembly which has been convened at 5.00 pm. Prior to the presentation of the budget, Prime Minister (PM) Imran Khan will preside over a meeting of the federal cabinet in Islamabad.
It will discuss and approve the budgetary proposals for the next fiscal year.
Adviser to the PM on finance Hafeez Sheikh will brief the cabinet about the budgetary proposals. A copy of the finance bill 2019-20 will also be laid before the Senate which has been convened to meet at 6pm.
The budget envisages fiscal management, revenue mobilization, measures for economic stabilization and growth, reduction in non-development expenditures; boosting exports besides providing relief to the masses, promoting investment for job creation and people friendly policies for the socio economic prosperity of the country.
Main focus in the budget would be on fiscal consolidation, revenue mobilization while the government is likely to enhance allocations for social safety net for providing maximum relief to vulnerable segment of the society, sources familiar with the matter told the media.
The budget is anticipated to focus on the development of the social sector, besides introducing reforms for improving governance and boosting private sector investment.
For improving tax revenue collection, the government aims to introduce effective measures for bringing improvements in the domain of tax, broadening the tax base, and facilitation to tax payers.
The PTI is of the view that a strong revenue generation will play a critical role in achieving the targets for economic growth, and therefore it is likely to set the revenue collection target at Rs5.55 trillion for the fiscal year 2019-20.
The preparations for the announcement of the federal budget for fiscal year 2019-20 have continued in full swing in accordance with the prescribed timelines. The budget has been prepared in close coordination between all departments and ministries involved in budget related events including the presentation of the budget in the parliament and launching the much-awaited Economic Survey.
Yesterday, the pre-budget document presenting state of country’s economy, ‘the Economic Survey of Pakistan’ was issued.
The survey outlined the overall performance of economy during the outgoing fiscal year, providing a realistic feedback and basis for future planning.

Health tax

Moreover, the government is also likely to announce health tax on tobacco and sugary drinks.
The government has announced health tax on cigarette to cut rising tobacco consumption that kills nearly 160,000 Pakistanis every year.
The Ministry of National Health Services (NHS) Regulation and Coordination recommended the measure to discourage cigarette smoking, increase revenues and save money by cutting tobacco-related health care costs.
Health tax of Rs10 per pack of 20 cigarette sticks and 1 per cent tax on all beverages (Rs1 on 250ml) has been proposed by NHS Ministry along with an increase in Federal Excise Duty on cigarettes in the upcoming budget.
Prime Minister Imran Khan has also approved the new tax and announced to end the tax-free cigarette facility for the prime minister, chief ministers and governors of all provinces to control the use of tobacco

Salary class

The budget for the upcoming financial year 2019-20 is likely to introduce tax burden on salaried class, as the federal government plans to reverse tax concessions for increasing annual revenue
Sources familiar with the matter told the media that two tax proposals will be considered by the government in this regard; the first, if implemented, will impose no tax on low salary earners up to Rs400,000 per annum, whereas the second will impose on tax on individuals earning up to Rs600,000 annually.
It is under consideration to adopt the tax year 2017-18 slabs for taxing, which will reduce monthly net income of salaried individuals.
Rs4,950 will be deducted from the salaries of individuals earning Rs100,000 monthly.
High earners with income up to Rs150,000 per month will pay Rs8,916, meaning they will pay Rs10,7000 annually in the form of tax, as compared to current tax slab of Rs30,000 annually.
Moreover, individuals earning up to Rs200,000 per month will pay Rs182,000 tax on annual basis.
Similarly, the revision of tax slabs to the year 2017-18 will help to raise additional income tax from association of persons in the tax year 2019-20.
The PTI-led coalition government has already reversed some incentives through the amended Finance Act 2019 given to business enterprises and individuals through the Finance Act 2018.
Other sales taxes and expenditure
The proposed budget strategy paper estimated the next year’s federal current expenditure at more than Rs6 trillion, following which the federal expenses are expected to reach Rs4 trillion.
As the federal government is set to announce the federal budget, it has set a target of Rs5,500 billion in tax revenue, with an expected increase of approximately Rs1,450 as compared to the previous year.
With an increase of one percent in the sales tax, the government has set a target of collecting Rs90 billion additionally.
Furthermore, the imposition of additional sales tax on petroleum products, Rs60 billion would be collected.
Besides, the proposal of increase in sales tax on tobacco, sugar, drinks and fertilizers has also been forwarded for a possible consideration.
The sales tax on tractors may also be increased from 5 percent to 18 percent.
Meanwhile, the government has formulated effective measures for restricting the tax evasion on hotels and marriage halls.
Importantly, implementation will be ensured on the track and trace system over receiving sales taxes. Out of the total tax revenue, Rs3,160 billion will be transferred to the provinces.
Sources said that the non-tax income in the budget is expected to be more than Rs1150 billion. According to Dunya News, the federal government is anticipated to spend Rs925 billion on development projects.
Besides, the GDP growth is expected to be more than Rs40.3 trillion in the next fiscal year and the deficit could be more than Rs2,350 billion. The financial deficit can be limited up to 5.8 percent in the current budget.
According to sources, Rs2,900 billion from the budget will be spent on interest and debt payments. The volume of subsidies in the next budget can be kept at more than Rs260 billion. Rs2,550 billion is likely to cover the financial deficit of the state.
‘Development budget for 2019-20’
The target for the development of the agriculture sector and major crops is to be set at 3.5%, and livestock at 3.7%, industrial growth at 2.3%, the construction and energy sector at 1.5%, communication sector at 3.5%, services sector at 4.8%, and the finance and insurance sector at 6.5%.
Overall growth target for the next fiscal year is likely to be fixed at 4%.
Investment target in the next financial year is anticipated to be set at 15.8%, according to the document available with Dunya News.
Importantly, the target to limit inflation in 2019-20 is set at 8.5%.
For defense, more than Rs1,250 billion are likely to be allocated.
According to documents obtained by Dunya News about the development budget presented in the National Economic Council, the center and provinces will spend Rs925 billion and Rs912 billion, respectively, for the development purposes. That makes the total budget for development equal to Rs1,837 billion.
Furthermore, Rs157 billion are to be allocated for the National Highway Authority (NHA), Rs42 for PEPCO, Rs5 billion for the Earthquake Reconstruction and Rehabilitation Authority (ERRA), Rs1.3 billion for the Aviation division, Rs1 billion for the Board of Investment, Rs7.57 billion for the Climate Change division and for Defense division the budget is likely to be reduced from Rs500 million to Rs420 million.
The development budget, under finance ministry, is likely to be doubled from Rs18 billion to Rs36 billion. The Ministry of Kashmir Affairs and Gilgit-Baltistan is anticipated to get Rs44 billion for the development.
For former fata merged tribal areas, under a ten-year programme, Rs22 billion would be allocated.
For the Higher Education Commission (HEC), Rs32.24 billion would be allocated.  For interior ministry, the budget is likely to be reduced from Rs13 billion to Rs9 billion.
Under Prime Minister s Youth Skills Development Programme, Rs10 billion are to be allotted to the concerned department(s).

Import and export

The exports target in the next fiscal year is likely to be set at $24.18 billion, whereas imports may be restricted at $53.66 billion.
The trade deficit in the budget is anticipated to be around $27.47 billion, while the current account deficit is expected to be $8 billion (the three percent of the GDP), according to the document.
In a significant move for increasing investment in the country, foreign investment target is likely to be set at US $4 billion.

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