ISLAMABAD: Finance Minister Dr Hafeez Shaikh is expected to deliver the largest budget by volume in the country’s history on Friday, with an estimated outlay of between Rs3.2 to 3.5 trillion for the fiscal year 2012-13 against Rs2.767 trillion in the previous year, Dawnnews reported.
The budget presentation will follow a special budget session of the federal cabinet to be headed by Prime Minister Yousuf Raza Gilani.
During the cabinet session proposals for the annual revenue target, finance bill, economic and social goals and changes in government employee salaries, pension, allowance and benefits would be reviewed.
The approval of the federal summary would come into effect after Prime Minister Gilani officially signs the document, following the cabinet session's amendments as per requirement.
The Gross Domestic Product in the new federal budget 2012-2013 will be projected at Rs23.7 trillion whereas fiscal expenditure is estimated to come to Rs2.85 trillion (as compared to Rs2.76 trillion for previous year).
The country's total development budget (federal and provincial) has been estimated at Rs825 billion for the next year — Rs350 billion reported for the federal portion while Rs 475 billion allocated for provincial development.
The federal board of revenue’s annual revenue target has been revised to Rs2.3 trillion as compared to Rs1.95 trillion from the 2011-2012 budget.
Changes in taxation
The federal finance minister is expected to propose five slabs for the salaried class and the same is expected for the non-salaried class. Firms, AoPs, salaried and non-salaried individuals earning up to Rs400,000 per annum would be exempted from Income tax.
A pleasant prospect for taxpayers is expected with a change in the tax structure, income tax would be applicable only to the amount exceeding the designated limit for respective slabs.
For example only that amount of income would be taxed which exceeds the Rs400,000 value. The marginal tax for salaried class is expected to be between 10-20 per cent.
Similarly, applicable income tax rates for the non-salaried class are expected to be between 10-25 per cent.
Currently the minimum taxable income announced in previous year’s budget was was Rs350,000 and in case the annual earnings exceed the amount then the tax rate was applied on the total amount without any exemption to the initial tax-free amount.
Sources have said that the budget includes a proposal to slash the customs duty rate from 35 per cent to 25 per cent, while other sources have reported a decrease of up to 30 per cent.
Also some 10 items, including sugar, are expected to be excluded from the scope of the Federal Excise Duty (FED) and some of those items would be included in the sales tax net.
It is expected that moving sugar into the net of sales tax would result in an increase of sugar price by Rs 5 per kilo, a burden that would have to be borne by the common man. The move is expected to provide an additional Rs8 billion to be spent from the national coffers.
But sources say the move has been rendered futile as the information has been leaked via proxies of government authorities to certain mills associated with the sugar mafia, which has now begun large-scale hoarding of sugar by diverting it from the mills to warehouses rather than making them available at stores for the public.
Sources have said that the proposals for the current budget will be presented in front of the cabinet today which include proposed increase in the salaries and pensions of civil and armed forces personnel. The proposals include increase of 15, 20, 25 and 30 per cent.
The government has already increased the salaries of government employees by 100 per cent in the previous four years and the current proposals also include a 50-100 per cent increase in conveyance, house rent, ceiling and medical allowance.