ISLAMABAD - Several popular and unpopular mea­sures were announced on Friday by the PTI government in its second budget for 2020-2021.

Among popular relief measures of the budget are that the government has not imposed new taxes, and instead it has given a relief of Rs. 45 billion in the taxes.

As regards unpopular measures, the government has not increased salary of the public sector employees and pen­sioners and has imposed tax on private schools which many believed would in­crease financial burden of the parents.

Because of critical coronavirus related lockdowns, the government did not im­pose any new tax in the federal budget for the year 2020-2021 to restore busi­nesses and prevent bankruptcies.

The government is expecting a 17% increase in revenues in FY21 while the total revenue collection target is Rs6.57 trillion including Rs4.96 trillion of the Federal Board of Revenue. The non-tax revenue target is set at Rs1.61 trillion.

To provide a level-playing field to com­mercial importers viz-a-viz manufactur­ers, the government has removed dis­tortions in the incidence of income tax on the import of capital goods and raw materials plug revenue leakages and fa­cilitate manufacturing by SMEs.

As paradigm shift in the current re­gime has been introduced by shifting from person-specific rates to goods specific rates cascaded according to the type of goods, with tax at 1% for capital goods, 2% for raw materials and 5.5% for finished goods irrespective of the sta­tus of the importer. The government has also suspended customs duty on 2,000 tariff lines to discourage smuggling.

The imports related to coronavirus will remain exempted from taxes for three months.

The export rebate will be transferred into the exporter’s bank account directly. The government abolished the tax on in­ter-bank transfers of remittance for one year. Foreign banks to be given tax ex­emptions. About 15% withholding tax to be introduced on the profit of all banks.

The government has relaxed laws to provide relief to the taxpayers. The sales tax on locally manufactured mo­bile phones has been reduced while withholding tax on marriage halls and schools eased. The period for withhold­ing tax on capital has been reduced from five years to four years.

The government is introducing a cen­tralised tax refund system and amend­ing laws to give FBR data. To save lower class from the tax burden, the summary will be given to exempt advance tax on rickshaws and motorcycles.

The development budget is set at Rs1,324 billion with a 27% increase in funds for new projects and 73% for existing programmes to combat the coronavirus.

Rupees 70 billion have been set aside to improve living standards. In a bid to encourage healthy living, the govern­ment has increased FED on imported cigarettes from 65% to 100% and from 13% to 25% on caffeine-based drinks. The sales tax on retailers has been re­duced from 14% to 12%.

The government has enhanced pov­erty alleviation and social safety net expenditure to Rs.208 billion and allo­cated Rs.2 billion for the Kamyab Jawan Programme. At least 820,000 fraudulent beneficiaries were removed from the Ehsaas Programme.

The artist welfare fund has been in­creased from Rs250 million to Rs1 billion and the innovation fund is at Rs10 million.

The energy and food sectors will be giv­en subsidies while Rs54 billion have been set aside for special areas, Rs25 billion has been allocated to uplift remittance through banks and Rs30 billion has been allocated for Naya Housing Authority.

To make travel affordable for the mass­es, the Pakistan Railways have been given Rs40 billion. In total, railways and trans­port have been allocated a budget of Rs118 billion. The ML-1 and other projects have been allocated Rs24 billion.

The CNIC condition had been a long­standing issue between the government and traders. The limit for goods purchased has been raised from Rs50, 000 to Rs100, 000. The power sector has been given Rs80 billion while Rs70 billion granted in dam funds. A sum of Rs1 billion has been dedicated to IT and e-commerce.

The government has allocated Rs33 billion for communications and Rs30 bil­lion 5G and e-governance.

On the other hand, the government has not increased salary of the public sec­tor employees and pensioners and has imposed tax on private schools which many believed would increase financial burden of the parents.