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Pakistan Economy: Amended Finance Bill - A right direction on a bumpy road

Key Highlights/ Summary

• Budget deficit to be contained to 5.1% from earlier target of 6% for FY19.
• Federal Public Sector Development Program (PSDP) to be set at Rs725bn, +10% YoY vs. last years actual Federal PSDP of Rs661bn.
• Withdrawal of restriction on purchase of new motor vehicles by non-tax filers.
• Withdrawal of requirement of being tax filer to purchase immovable property of value exceeding Rs5mn.
• Increase in excise duties in cigarettes and expensive cell phones. On the flip side, measures to curb illegal/smuggled cigarettes would be ensured.
• Reduction in collection target of Petroleum Development Levy (PDL) by Rs100bn.
• Tax exemption on salaried class with taxable income of less than Rs2.4mn to be maintained while upward revision was made for individuals earning taxable income of more than Rs2.4mn.
• Regulatory Duties (RD) to be reduced on inputs (82 items) used by zero-rated five export sectors (including textile).
• Additional revenue measures of Rs182bn, including curbing tax evaders, increasing WHT, RD and Customs Duty (CD).
• Increase in RD on luxury imported vehicles for 1800cc or more from 10 to 20%.
• Withholding tax on banking transactions for non-tax filers to be increased to 0.6% from earlier 0.4%.
• Construction of nearly 18k houses for poor segment with immediate release of Rs4.5bn in first phase.
• Minimum 10% increase in Employees Old-Age Benefits Institution (EOBI) pensioners.
• Sehat Sahulat health program to be extended to FATA, Islamabad and Punjab.