Finance Minister Miftah Ismail presented the budget for fiscal year 2022-23 (FY23) in the National Assembly.

Under the new budget, the government has proposed an advance tax of 200 percent on the purchase of cars with engines larger than 1600cc.

The government has increased the advance tax on the aforementioned vehicles by 100 percent for non-filers only. Although this tax will have no impact on the car’s price tag, it will aid the government in collecting more taxes from people with high purchasing power and bring them into the tax net.

Key budgetary proposals

  • No tax on salaries of up to Rs100,000 per month; previously minimum taxable salary was Rs50,000/month

  • Minimum tax bracket for small business persons to be raised from Rs0.4 million to Rs0.6m

  • 15pc increase in salaries of government employees

  • Sales tax exemption on import of solar panels and distribution

  • Advance withholding tax will be collected from those sending remittances abroad via credit, debit and pre-paid cards

  • Advance tax will be increased on cars above 1,600cc

  • Exemption of complete custom duty on pharmaceutical ingredients

  • Rs51bn proposed for education projects

  • Rs24bn for health sector

  • People earning an annual income of Rs300 million or more per year are proposed to pay 2pc extra tax

  • Advance 2pc tax on the value for high-value hybrid and electric vehicles.

The government has budgeted total current expenditure at Rs8,694bn for FY23, which is 15.5pc higher than last year's budgeted figure.

Defence expenditure is budgeted at Rs1,523bn, which makes up 17.5pc of total current expenditure and is 11.16 per cent higher than last year.

Interest payments, or debt servicing, budgeted for FY23 have risen a whopping 29.1pc from last year to Rs3,950bn — making up the single largest expenditure of the government, which accounts for 45.4pc of total current expenditure.

Total revenue budgeted for FY23 stands at Rs9,004bn. After subtracting provincial transfer of Rs4,100bn as part of the National Finance Commission (NFC) Award, net revenue comes out at Rs4,904bn, nine per cent higher than last year.

The government has set the tax collection target for the Federal Board of Revenue (FBR) at Rs7,004bn for FY23, which is 20.1pc higher than last year's Rs5,829bn.

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