Incentives, ‘diamond card’ for overseas Pakistanis: Key takeaways from

Islamabad: The Pakistani government has unveiled its federal budget for the fiscal year 2023-24, featuring incentives for the agriculture and IT sector, salary increases for government employees, exemptions on solar panels, and other subsidies.

Pakistan’s Finance Minister Ishaq Dar announced the Rs14.5 trillion (around $50.5 billion) budget in the National Assembly on Friday, with over half of the funds allocated to service Rs7.3 trillion of debt.

The government has set aside around Rs1 trillion for subsidies in the electricity and gas sectors. The target for tax collection is set at Rs9.2 trillion ($32 billion) and envisions a 3.5 percent GDP growth. However, experts and opposition have expressed concerns about inflationary pressure, unrealistic revenue targets, and the expansion of the fiscal deficit.

The government has made changes regarding remittances from overseas Pakistanis. Foreign remittances up to the equivalent of $100,000, no longer require the source of income or assets to be explained.

Furthermore, a ‘diamond card’ will be introduced for individuals sending over $50,000 in remittances.

The card offers several benefits, including preferential access to Pakistani embassies and consulates, fast-track immigration at airports, and special prizes through draws.

To boost production, the agriculture credit for the fiscal year is being increased from Rs 1.8 trillion to Rs2.25 trillion. The budget also includes various measures such as Rs30 billion to switch 50,000 tube wells to solar energy, tax exemptions on the import of quality seeds and saplings, allocation of Rs5 billion funds for the agro-industry, and a five-year tax exemption for agro-based industrial units with an annual turnover of Rs 800 million.

Incentives for the IT exporters include the continuation of a 0.25 per cent concessional rate of income tax until June 30, 2026, and the duty-free import of IT-related equipment equivalent to 1 per cent value of their export proceeds. Additionally, freelancers earning up to $24,000 per year will be exempted from sales tax registration and allowed to file a simplified single-page income tax return. The government is establishing a venture capital fund with Rs 5 billion to support IT entrepreneurs. Sales tax rates are being reduced rate from 15 per cent to 5 per cent on IT services. Professional training will be provided to 50,000 IT graduates.

To promote renewable energy, the government has exempted customs duty on the import of solar panel components, including inverters, solar panels, and batteries. This exemption aims to reduce the cost of adopting solar energy for consumers.

The federal government has reserved Rs65 billion for the current expenditures and Rs70 billion for the development expenditures of the Higher Education Commission (HEC). The budget has set aside Rs10 billion for the distribution of 100,000 laptops to deserving students. It includes the establishment of the Pakistan Endowment Fund worth Rs5 billion for merit scholarships.

Salaries of government employees between grades 1 to 16 will increase by 35 per cent and those in grades 17 and above will see a 30 per cent increase to help cope with inflation. The minimum monthly wage within the Islamabad Capital Territory (ICT) will be raised to Rs32,000 and the minimum pension will be Rs12,000.

The budget increases the allocation for the Benazir Income Support Programme (BISP) by 25 per cent to Rs450 billion. Assistance will be provided to 9.3 million families, and scholarships will be awarded to 92,000 students under the social safety net programmes. The number of beneficiaries for the nutrition initiative has also been increased.

A defence budget of Rs1.8 trillion ($6 billion) was…