Announces tax exemptions for education, health sectors. Says tax exemptions can’t be granted for packaged milk. Finance bill fails to address critical economic challenges, says Leader of Opposition. Govt to increase tax to GDP ratio to 13pc: Aurangzeb.

ISLAMABAD   -   The National Assembly on Friday passed the Finance Bill 2024 after a clause-by-clause consideration, incorporating specific amendments.

Minister for Finance and Revenue Muhammad Aurangzeb moved the motion for consideration of the Finance Bill, 2024 to give effect to the financial proposals of the federal government for the year, commencing on July 1, 2024.

The motion was passed with majority vote which led to the passage of Finance Bill-2024 after clause-by-clause reading and adopting amendments after due process of voting. All the amendments, presented by the opposition members, were rejected.

The total outlay of the federal budget for the fiscal year 2024-25 is Rs18.877 trillion. This budget outlines the government’s fiscal policies and budgetary allocations for the upcoming financial year, reflecting a comprehensive plan to address various economic and social challenges.

The government has allocated Rs. 1,400 billion for the Public Sector Development Programme (PSDP) in its current budget, and an additional amount of Rs100 billion would be allocated under Public-Private Partnership, bringing the total to Rs1,500, the highest in the country’s history.

In the budget grants amounting to Rs1,777 billion for the promotion of the Benazir Income Support Programme (BISP), Azad Jammu and Kashmir (AJK), Gilgit-Baltistan, merged districts of KP, Higher Education Commission, Railways, and IT sectors have been allocated.

To ensure equitable development in AJK, GB, and merged districts of the KP, the government has allocated at 10 percent and around 11 percent for other sectors development including IT, telecom, science and technology, governance, and production sector.

The House also held discussion on the Charged Expenditure that included Demands for Grants and Appropriations for the financial year ending on June 30, 2025.  The House approved 133 demands for grants related to various departments and ministries. According to the Rule 187 of the Rules of Procedure and Conduct of Business in National Assembly 2007, not less than four days shall be allotted for the general discussion on the budget.  However, the National Assembly smoothly continued debate on the Finance Bill, 2024 for eight days.

The formal debate started on June 20, 2024 that continued till June 27, 2024. The House also discussed recommendations of the Senate.

Minister of Finance Muhamamd Aurangzaib termed the budget 2024-25 as growth budget and said it was based on a well-thought-out strategy to boost the economic growth.  

He said that the budget for the next fiscal year was aimed at narrowing the fiscal deficit by expanding the government’s revenues and cutting unnecessary expenditures.

Muhammad Aurangzaib reiterated the government’s commitment to increasing the tax-to-GDP ratio to 13 percent, which currently stands at a low 9.5 percent. He said that the country had achieved macroeconomic stability. He highlighted that the economic indicators, including the current account, fiscal deficit, inflation, and foreign exchange reserves, were stable and under control.

He outlined the government’s plan to continue this economic stability into the next fiscal year, aiming to lead the country towards sustainable economic growth. He also called for reconstructing and digitising the Federal Board of Revenue (FBR) to ensure high GDP target. He said that the concept of non-filers would be eliminated from the tax system, making it mandatory for everyone to pay taxes.

The minister expressed the government’s resolve to curb tax evasion and expand the tax net, particularly targeting retailers and the real estate sector. He said that the current account deficit had decreased, the fiscal deficit was under control, and the country had foreign reserves of $9 billion, providing an import cover for two months.

He highlighted a significant reduction in inflation, from 38 percent to 11 percent, and sustained food inflation at two percent. He said that no tax had been imposed on the solar.  

The finance minister said that cardiology stents, surgical items, books, printing, and items and in FATA and PATA region had been granted tax exemptions. He said that tax exemptions could not be granted for packaged milk that did not meet quality standards. He said that these tax exemptions for education and health sectors were provided despite the challenging economic conditions.

Opposition leader in the National Assembly, Omar Ayub, along with Pakistan Tehreek-e-Insaf (PTI) Chairman Gohar Ali Khan and Sunni Ittehad Council leader Ali Muhammad said relevant stakeholders were not taken on board during the formulation of the bill.

Omar Ayub said: “The finance bill fails to address the critical economic challenges faced by the country and has been drafted without adequate consultation with the key stakeholders.” Gohar Ali Khan said: “This bill is not reflective of the people’s aspirations or the country’s economic realities.”

Also, Aurangzaib said that the government is committed to increase the tax to Gross Domestic Product (GDP) ratio to 13 percent, which is currently very low stand at 9.5 %.

The minister said that the country has achieved macroeconomic stability and by continuing economic stability this FY, 2024-25, “We will lead the country towards sustainable economic growth.”

Meanwhile, participating in discussion on the budget 2024-25, in the National Assembly, he said that there is economic stability in the country at the moment and all the economic indicators including current account, fiscal deficit, inflation and foreign exchange reserve are stable and in control.

The minister said that the government is committed to go for reconstruction and digitisation of Federal Board of Revenue (FBR) to take tax to GDP to 13 percent. He said that there will be no category of non-filer in the tax system and everyone will have to pay tax.

Aurangzaib said that tax evasion will be stopped and the tax net will be increased for retailers and the real estate sector in the country. He said that the current account deficit has decreased, the financial deficit is also under control and the country currently has a foreign reserve of $ 9 billion, which has provided an import cover of 2 months.

He said that inflation has come down from 38 percent to 11 per cent and similarly food inflation is sustained at two per cent now. He said that State Owned Enterprises (SOEs) and energy sector reforms will start and the process of privatisation will be completed in the coming three years.