The federal cabinet on Tuesday approved the federal budget for the year 2014-15, with a total outlay of Rs3.945 trillion, and a Public Sector Development Programme allocated at Rs525billion.
Finance Minister Ishaq Dar told parliament n his budget speech that he aimed to reduce the budget deficit to 4.9 per cent of economic output in the 2014-15 fiscal year from 5.8 per cent a year earlier.
Budget spending has been set at Rs3.8 trillion ($39.3 billion), while tax revenues that Pakistan would be able to collect in the next fiscal year are estimated at 3.94 trillion rupees.
With the budget, the government has introduced welfare schemes for farmers, homeless, the unemployed, businessmen and 10 per cent relief for government employees.
Dar also said Pakistan would invest at least Rs205 billion ($2.08 billion) in power projects in the next fiscal year as part of a plan to reform the struggling sector.
Spelling out the revenue generation plans of the government, the minister said the share of provincial governments in the taxes would be Rs 1.72 trillion against Rs 1.41 trillion last year. Net resources left with the federal government would be Rs 2.22 trillion against the revised estimate of Rs 2.18 trillion for last year.
He said the expenditure for the next fiscal year had been budgeted at Rs 3.937 trillion, 2 per cent higher than the previous year's, which was much lower than the inflation rate.
The minister said the budget deficit had been reduced to 4.9 per cent and estimated at Rs 1.71 trillion for the next fiscal year. By requiring surplus of Rs 183 billion last year, the government had projected an overall fiscal deficit of Rs 1.422 trillion for the next year, he added.
Dar also announced measures to simplify the existing tax regimes and remove inequities created by SROs-based concessions, which would be carried through a phased plan.
The finance minister said that, to ensure continued stability in the stock market, it was proposed that from July 1, 2014, the Capital Gains Tax (CGT) rate would be 12.5 per cent for securities held up to 12 months and 10 per cent for those held for 12 to 24 months.—Agencies