ISLAMABAD - Accommodating 56 recommendations proposed from Upper House, the PML-N government in Thursday’s National Assembly session announced that 7.5 increase in salaries of civil servants will be implemented after merger of two adhoc reliefs in the basic pay.

“The government would have to bear additional expenditures worth of two billion rupees in merging the adhoc allowance and combined effect of the government’s decision is 11 percent increase in salaries,” said Finance Minister Ishaq Dar while winding up debate on the finance bill 2015-16. About agriculture reforms, Ishaq announced to form a fund worth of Rs 20 billion for subsidizing potash and phosphatic fertilizers. The federal and provincial governments would equally contribute to the fund. He further informed that the government has reduced the General Sales Tax (GST) to 7 percent from 17 percent on pesticides.

The government has also extended the time period to seven years from five for paying loans of solar tube wells. Custom duty on import of oilseed has been reduced to zero. Similarly, sales tax on oilseed has been decreased to five percent from 10 percent.

The Finance Minister also announced a package for mobile manufacturing sector in the country. Mobile units to be established from July 2015 to June 2018 would be exempted from income tax for five years. Similarly imports of plants, machinery and assembly line equipment would be exempted from customs duty and sales tax. Ishaq Dar also announced to withdraw five percent GST imposed on poultry feed in a bid to control chicken prices in the country. The government has also reduced the Federal Excise Duty (FED) on Aerated water 10.5 percent from proposed 12 percent with the condition that companies would not increase the prices of their drinks.

He also informed the house that government would also give tax holiday package to the Balochistan province as it offered to KPK. All industrial units to be set up in Balochistan from July 2015 to June 2018 would be exempted from income tax for five years. Similarly, exporters and traders of Balochistan could trade the food commodities to Afghanistan in rupee against dollars, he added.

Ishaq Dar further informed that withholding tax on the advertisement on electronic and print media would be 12 percent for companies and 15 percent for individuals in case of non-filers. However, there would be only one percent withholding tax in case of filers.

The Finance Minister said that the government would first merge the two-adhoc allowances in the basic pay and then it would give 7.5 percent increase on it. The government would have to bear additional expenditures worth of two billion rupees in merging the adhoc allowance. The combined effect of the government’s decision is 11 percent increase in salaries, he added.

He said there is need to form a charter of economy with consensus of all political parties. He further said that the government has accepted 56 recommendations of the Senate out of 92 for incorporating in the Finance Bill 2015. He said that advance withholding tax of 0.6 percent would be charged on the amount used through banking transactions (cross cheques, demand draft and pay order etc) for the non-filers.

The Finance Minister has once again reiterated that budget 2015-2016 was pro-poor, as government provided incentives to the poorest of the poor.

Talking about the pro-poor decisions made in the budget, he said the government has increased the allocation for Benazir Income Support Programme (BISP) to Rs 102 billion from Rs 97 billion. The number of beneficiary families would increase to 5.3 million next year. The government doubled the Bait-ul-Mal budget to four billion rupees from two billion rupees. Similarly, in order to provide relief to the widows of those martyred in suicide attacks, he said the government had decided to pay their outstanding loans up to Rs1 million and markup as on June 30, 2015, obtained by the deceased husbands in their names or in the names of widows from banks or financial institutions. Talking about the National Finance Commission (NFC) award, Dar said that the government would expedite the process of constituting new award after the passage of budget. The PML-N has no issue if all other parties agree to include FATA, Azad Jammu and Kashmir and Gilgit Baltistan in NFC Award, he said and added that the government would introduce constitutional amendment for it if needed.

On violation of Fiscal Responsibility and Debt Limitation Act 2005, the Finance Minister said that it was violated even before the government of PML-N, as the public debt was more than 63% of the total size of national economy on June 30 2013. The government had reduced it by one percent each in last two years, he added. Ishaq Dar made it clear that the government had allocated Rs 16 billion and Rs 25 billion for Diamer Bhasha Dam and Dasu Dam respectively for the upcoming fiscal year. The government had also earmarked funds for the civil nuclear plan, which has combined capacity of producing 2200 MW electricity. All these mega projects would be completed after 2018, he remarked.

He informed the house that the government would complete the Lowari tunnel project by December 2016. Talking about China-Pak Economic Corridor (CPEC), he said that government would honour its commitment made in All Parties Conference (APC) held on May 28 by completing the western corridor of the project first. This project is a game changer for us and it would be given priority, he added.

The Finance Minister said that the government has placed the supplementary grants worth of Rs 136 billion for the outgoing fiscal year before the parliament, which is only four percent of the budget as against previous traditions of 23 percent.

The government needed supplementary grants due to the additional expenditures on increase in subsidy and rehabilitations of Temporarily Displace Persons (TDPs) of operation Zarb-e-Azb, he added. He informed the house that government would face extraordinary expenditures of Rs 100 billion for the rehabilitation of TDPs during the upcoming financial year.

Ishaq Dar has made it clear that the government had not imposed tax on ghee/oil and cement in the budget. Duty on furnace oil and high-speed diesel has also not been increased, the finance minister said.