ISLAMABAD           -      Amid a noisy protest by the opposition in the national opposition, the PTI-led coalition government on Monday got approved with a majority vote the finance bill for next fiscal year 2020-21 with total outlay of Rs 7.136 trillion.

The PTI government, in its second federal budget 2020-21, rejected all nine amendments moved by the opposition with majority of votes. The opposition faced defeat with 41 votes, when it challenged the government on its last [ninth] amendment.

The opposition with the support of two members from a former allied partner of PTI’s government [BNP-Mengal], were 119 in the house, whereas, 160 members from treasury benches were present in the house at the time of voting.

The ruling party [PTI], during the voting in the house, got the support of its coalition partners including MQM-P, PML-Q and GDA while BNP-Mengal did not support the government as around a week ago it had announced to quit the ruling alliance.

Prime Minister Imran Khan, amid desk-thumping from treasury benches, participated in the middle of the proceedings. Unlike the thin presence in the last two weeks, the house witnessed 279 members in the house. Many of the members apparently due to scare of COVID-19 and some of them, who were recently tested positive of coronavirus, did not attend the proceedings.

The opposition lawmakers, during the speeches of government members kept raising anti-government slogans.

The government had presented its second federal budget on 12 June. The government during the session faced criticism for not increasing salaries and pensions of government employees. The opposition members in their speeches were unsatisfied with the allocations for agriculture, health and education sectors. The allocation for the construction of dams at the time of corona crisis was also termed irrational in the budget for the next year.

The total size of the budget for the next year is Rs7.136 trillion, with a deficit of Rs3.437 trillion (7 percent of GDP).  The main strategy of the present government is to provide relief to the masses by not imposing any new tax, which it believes, would help increase the economic activities in the country.

Of the total, current expenditure for the next fiscal is budgeted at Rs6.345 trillion. The government has allocated Rs1.289 trillion for defence, Rs2.946 trillion for interest payment, Rs650 billion for federal development budget, Rs470 billion for pension, Rs209 billion for subsidies and Rs476 billion for running civil government. In this budget, provinces would receive Rs2.874 trillion from the center under the National Finance Commission (NFC) Award. The government, according to its plan, has set tax collection target at Rs4.96 trillion and non-tax collection target at Rs1.61 trillion.

Minister for Industries Hammad Azhar, responding to the objections raised by opposition, clarified the relief was provided not only in the construction sector but also for promotion of mobile phone manufacturing and electric vehicles.

“For the first time that the annual development plan carries the biggest allocations for Balochistan and Sindh,” he claimed, mentioning that duties and taxes on import of sixteen hundred raw materials have been brought to zero.

About the concerns raised by PML-N MNA Ahsan Iqbal, he said that the government has not increased the sales tax or petroleum development levy on petroleum products. He said their prices have been increased keeping in view the upward trend in the international oil market.

In the Finance Bill 2020-21, the federal government has set an ambitious tax collection target of Rs4.963 trillion without imposing any tax.  The government claimed that it has not imposed any tax in the budget for the first time in the country’s history. However, it has provided tax relief worth of Rs45 billion in terms of different taxes.

In the approved Finance Bill, the government has reduced the minimum tax on the hotel industry from 1.5 percent to 0.5 percent during the months for six months with effect from April.

Meanwhile, the government approved a proposal of increasing the upper limit for shopping without showing identity card from Rs 50,000 to Rs 100,000. In a relief measure for construction industry, the government has approved to reduce the Federal Excise Duty (FED) on cement to Rs1.75 per kg on cement from existing Rs2 per kg. The decision would help in reducing the cement price by around Rs20 to Rs25 per bag.

The National Assembly, in the approved Finance Bill, has increased the FED on caffeine based energy drinks from 13 percent to 25 percent to discourage its consumption.

It has also approved the proposed to impose tax on double cabin Pick-Up vehicles as per other cars as wealthy people use these pick-ups as status symbol.  The government has also approved the proposal of increasing the rate of FED on cigars, cheroots, and cigarillos and cigarettes from 65 percent to 100 percent of retail price.

Meanwhile, it has also approved increase in the rate of FED on filter rods from Rs0.75 to Rs1 per filter rod. Similarly, it has suggested to levy FED on e-liquids of electric cigarettes @ Rs 10 per ml. The government has proposed to imposition of FED on caffeinated energy drinks @ 25 percent.

In the approved annual budget, the government reduced taxes for reducing cost of doing business. Regulatory duty on 1623 tariff lines of raw materials used in textile, chemical, rubber and other industries are totally withdrawn. Similarly, the government has abolished ten types of withholding taxes. Withholding tax on cash withdrawal to the extent of foreign remittances has exempted. The property expenses of all individuals and associations of persons were allowed for adjustability. To promote investment in government debt instruments through a foreign bank account, a non-resident rupee account repatriable or an international currency account was allowed. The government also plans to establish a centralised Income Tax Refunds and Hajj operators are exempted from withholding tax on payments to non-residents.

Massive relief has given to different sectors especially the construction. The Capital Gains Tax is being halved while the federal excise duty on cement has reduced by 25 paisa. Sales tax for the retailers opting to link themselves with the FBR is being reduced to 12 percent from 14 percent. Taxes and duties are being abolished on the testing kits of corona virus and cancer.