Beruflich Dokumente
Kultur Dokumente
3 June 2016
Budget Speech 2016-17
Bismillahir-Rehmanir-Rahim
PART-I
Mr. Speaker,
1.
Minister and the Leader of the House is recovering very fast after undergoing
surgery. Prayers of this House, entire nation and millions people from around
the world are with him for his speedy recovery so that he can come back and
take charge of the countrys leadership.
Mr. Speaker,
2.
2013, and the journey we had passed in the past three years under the
leadership of Prime Minister Nawaz Sharif, we thank the blessings of Allah
bestowed upon us, Alhamdolilah, the dangers faced to the economy are over,
and the country is on the path to stability and growth. Those who had
predicted Pakistans default by June 2014 have been defeated. We have not
only prevented the country from economic default, but also have stabilized the
economy. Today international organisations are taking Pakistans name with
respect.
Mr. Speaker
3.
articulated in our Manifesto before the 2013 general elections on the basis of
which we won the national elections. Our challenge was to put them in action
and diligently remain on course until their fruits were borne. We have done
precisely this and have not only prevented default but have solidly stabilized
the economy and reinvigorated growth. Today, Allah has honored us to
present the 4th Budget of the country and in every budget we have done better
than the previous one and all economic indicators testify to this claim.
Comparative Economic Performance 2012-13 vs. 2015-16
Mr. Speaker:
4.
I would like to place before this august House the following key
2)
3)
4)
6)
7)
Policy Rate of SBP was 9.5% in May 2013, which has now
been brought down to 5.75% as on May 2016 which is lowest
rate in the past four decades.
8)
9)
Imports were recorded at $33.0 billion during Jul-Apr FY201213 compared to $32.7 billion for the same period in FY2015-16.
Savings in the import bill of oil were nearly 40% but we diverted
these savings to increased imports of machinery and industrial
raw materials, thus enabling more growth oriented activities. The
imports of machinery over the last three years have increased
by a cumulative growth of 40%, which is again an indication of
rising investment in the economy;
10)
11)
13)
14)
5.
This brief review clearly demonstrates that we have not only achieved
solid macroeconomic stability, but the country has been put on to a path of
growth. International organisations, economic experts as well as worlds
leading publications have lauded Governments performance. Therefore, with
Allahs blessings we remain committed to economic growth and this budget
will reflect our commitment.
Main Elements of Budget Strategy
Mr. Speaker
6.
1)
2)
3)
Raising Tax Revenues: Part-II of the speech will deal with tax
proposals. At this stage, however, I would say that the proposed
reduction in deficit will be achieved through a combination of
better tax collection and tight expenditure controls;
4)
5)
6)
7)
ii.
iii.
iv.
8)
Optic Fiber Cable Program: Under this scheme in FY201617 Rs.63.4 million have been allocated for on-going projects
in Balochistan and Rs.1.9 billion for three new projects in
Khyber Pakhtunkhwa, Balochistan, Sindh and Punjab;
2)
3)
4)
5)
6)
8.
10.
12.
13.
14.
Water
15.
water sector, where we are investing Rs.32 billion for projects in various parts
of the country. Other than these allocations, a project that will be the future
lifeline of Pakistan is the Diamir Bhasha Dam, which will store 4.7 MAF of
water and generate electricity of 4500 MW. We have provided Rs.32 billion for
the project. Another important hydropower project is Dasu, which will have the
17.
Canal (Ghotki and Sukkur), extension of Right Bank Outfall Drain from
Sehwan to sea, and Darwat Dam. In Punjab construction of Papin Dam in
Rawalpindi will commence. In Khyber Pakhtunkhwa, other than Dasu, funds
will be provided for construction of small dams in district Mansehra, and a
sizeable project of Chashma Right Bank Canal 1st Life Cum Gravity will
begin. In FATA funding for Kurram Tangi in North Waziristan, and Gomal Zam
Dam in South Waziristan will continue.
18.
Power
19.
10
20.
add new and economical capacity in the national grid. During the current year
a sum of Rs.380 billion will be invested in this sector up from Rs.287 billion
allocated in last years budget. Of this, Rs.130 billion will come from the PSDP
this year as compared to Rs.112 billion allocated last year.
21.
Large projects, other than Dasu and Diamir-Bhasha, that are part of
Coastal Power Projects (2200 MW) with Chinese assistance; Chashma Civil
Nuclear Power project (600 MW); Golan Gol Hydro Power Project (106 MW);
Evacuation of power from wind power projects at Jhimpir and Gharo Wind
Clusters; Interconnection of Chashma Nuclear Power Plants III and IV are
also included in the plan.
23.
number of hydel, coal, wind energy and nuclear fuels will correct the energy
mix to provide cheap electricity to the people of Pakistan, while improvement
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of the transmission and distribution system will reduce the system losses.
Steps against electricity theft will reduce burden on the common citizens.
Highways
24.
Lahore-Karachi Motorway. We firmly believe that this highway will change the
fate of this country. It will provide jobs, farm-to-road connectivity and
economic growth in Pakistan. In the Budget 2016-17, we have allocated
Rs.34 billion for Lahore-Abdul Hakeem Section, which is about 230 kilometers
long. Similarly, an allocation of Rs.19 billion has been provided for MultanSukkar Section (387 kilometers), whereas in order to complete the SukkurHyderabad Section (296 kilometers), a provision of Rs.2.5 billion has been
made in the PSDP. This project is being executed in collaboration with private
sector.
26.
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Lowari Tunnel and Access Roads, Qila Saifullah Lora Lai Waigum Road, and
Zhob Mughal Kot Road.
Railways
28.
Karachi is the result of efforts of the Railways Ministry. However, this is the
beginning of a bright future. Pakistan Railways will target its investments
around locomotives, bogies, tracks, signaling systems, and improvement of
existing railway stations.
30.
For the current years budget the following projects will be our key
priority:
1) Track rehabilitation project between Khanpur and Lodhran is
progressing. This year we aim to start work on doubling /
improvement of existing track from Port Qasim to Bin Qasim
Station. This is an important CPEC project.
2) Pakistan Railways faces shortage of locomotives and for this
reason, we have allocated Rs.14 billion for the procurement /
manufacture of new locomotive engines. In addition,
rehabilitation of rolling stock will also continue.
3) Repair work on around 800 coaches and 2000 wagons will be
completed by this year.
31.
are in PSDP for 40 development schemes and Rs.37 billion for pay &
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Human Development
32.
Initiatives that will be undertaken for the promotion of this sector are as
follows:
1) A allocation of Rs.21.5 billion has been made for 122 projects of
the Higher Education Commission, which will support
development plans of different universities all over the country. It
may be noted that on the current side also a hefty allocation of
Rs.58 billion is made for HEC. Thus a combined outlay of
Rs.79.5 billion will be made for higher education. The combined
allocation represents about 11% increase.
2) Health sector service delivery has been fully devolved to the
provincial governments. As per the decision taken by the
Council of Common Interests in 2010, the Federal Government
continued to support the provincial Governments till this year for
the national health and population welfare programs. This year
the Federal Govt will allocate Rs.22.4 billion for the vertical
health programs. Implementation of Prime Ministers National
Health Insurance Program will continue.
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Mr. Speaker
34.
35.
To cater for the needs of hosting, rehabilitation and the return of TDPs
36.
CPEC is a historic scheme that will start a new age between Pakistan
and China and will enable both of the countries to extended connectivity with
various other countries of the world
37.
Under this scheme, $46 billion investment will be made under various
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Development of Gawadar
38.
duty that we must further consolidate the achievements and accelerate the
reforms in sectors that have been left behind. For this I announce the
following measures:
Export Promotion
40.
Pakistans export potential has not been fully realised due to depressed
2)
3)
Drawback on local taxes and levies to the tune of Rs.1.4 billion; and,
4)
Reduction of mark-up rates on Export Refinance Facility and LongTerm Finance Facility.
16
41.
2)
3)
4)
5)
6)
7)
All the pending sales tax refunds till 30th April whose RPOs have
been approved, will be paid by 31st August 2016.
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Textile Sector
Mr. Speaker,
42.
2)
3)
4)
5)
18
43.
employment to 44% of the labor force and contributes 21% in the GDP.
Agriculture also provides 70% of the raw material for textile industry. National
food security is also dependent on agriculture. Therefore, enhancing
agriculture sector performance is central to increasing GDP, enhancing
industrial productivity and income of rural population.
44.
1)
2)
45.
3)
4)
Government has decided to take further special steps in the current financial
year. Details are as under:1) Concessions of taxes and duties: Tax and duty concessions
announced in Budget 2015-16 will continue in 2016-17. These
concessions amount to Rs.15 billion and are expected to
promote agriculture sector development,
2) Reduction in prices of fertilizer: Fertilizer is a major input cost
in the agriculture sector. In the past few months, through the
provision of gas to fertilizer industry, the Government reduced
19
20
9)
21
INDUSTRIAL DEVELOPMENT
46.
Our industrial sector has shown good performance during the current
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shares. This tax credit is allowable for five years from start of
commercial production. It is proposed to reduce the condition of
100% fresh equity to at least 70% equity. In addition, period of
setting up of new industrial undertaking, which is going to expire
on 30th June, 2016 is also proposed to be extended to June,
2019;
5) Tax Credit for Expansion of Existing Plant or New Project:
At present, 100% tax credit on tax payable is allowed for
expansion of existing plant or new project if 100% fresh equity is
raised through issuance of new shares. This tax credit is
allowable for five years from start of commercial production. It is
proposed to reduce the condition of 100% fresh equity to at least
70% equity. Tax credit would be allowed, proportionately, on
owned new equity. In addition, last date for installation of the
plant and machinery which is going to expire on 30th June 2016
is also proposed to be extended to June, 2019;
6) Exemption on investment in green-field industrial
undertakings: Period of exemption to investment in green field
industrial undertakings announced under Prime Minister's
package of investment that is going to expire on 30th June 2017
is proposed to be extended up to 30th June, 2019;
7) Reduction in Customs Duty on Raw Materials and
Machinery: To further increase in GDP of industrial sector
existing customs duty of 5% will be reduced to 3% on two
thousand items of mostly machinery and raw materials, which
will benefit industrial sector to the tune of Rs.18 billion;
8) Abolishing regulatory duty on Bead Wire: Bead wire is the
raw material of the tyres manufacturing industry which is
currently subject to 10% customs duty and 30% regulatory duty.
This item is not locally produced. In order to provide incentive to
the local tyres manufacturers, it is proposed that regulatory duty
may be exempted on import of Bead Wire.
23
Cement clinker,
ENERGY SECTOR
47.
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FINANCIAL SECTOR
Mr. Speaker,
48.
performance. In the current financial year till March, the total assets of this
sector stood at Rs.14,300 billion which were Rs.12,100 billion in the previous
year. This sectors Capital Adequacy Ratio (CAR) was 16.3% while its legal
requirement was only 10.25% that reflects strong capital base. To further
strengthen the financial sector in the country, the following measures are
being taken:
49.
1)
2)
3)
4)
51.
5)
6)
Most of these schemes have been fully started and their performance
Budget Estimates
Mr. Speaker,
53.
Now I turn towards the estimates of revenues and expenditures for the
Forces keeping in view the security challenges. The defense budget is being
increased from the Rs.776 billion for 2015-16 (Revised) to Rs.860 billion for
2016-17, which is an increase of about 11%.
58.
PART-II
Mr. Speaker,
60.
I have already placed before the house, in earlier part of the speech,
the tax relief and growth measures that have been proposed for the different
sectors of the economy.
61.
Now I shall place before the House further relief and tax measures that
are proposed to be introduced in the current Budget starting with income tax
measures.
INCOME TAX
RELIEF MEASURES:
62.
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63.
Tax Credit for Enlistment - At present 20% tax credit on tax payable
life insurance agents is taxed under final tax regime at the rate of 12% for
filers and 15% for non filers. To facilitate low income group it is proposed that
final tax rate on commission of life insurance agent may be reduced to 8% for
filers on commission receipts up to Rs. 0.5 M.
29
68.
Moving Consumer Goods are operating at low profit margins and therefore
minimum tax u/s 113 is chargeable at reduced rate of 0.2%. However, FMCG
distributors are subject to normal rate of withholding tax on their supplies. For
distributors of FMCG, it is proposed to reduce WHT rate on supplies from 4%
to 3% for companies and from 4.5% to 3.5% for others. However no reduction
would be available for non-filers.
71.
Act 2015, Minimum Tax at the rate of 8% was levied on corporate service
providers. Some Corporate service providers with low profit margin were
allowed a reduced tax rate of 2% for Tax Year 2016. It is proposed that
reduced tax rate of 2% allowed to low profit margin corporate service
providers for Tax Year 2016 may be extended for Tax Year 2017. In order to
30
persons deriving income from renting of property including widows and senior
citizens taxation of property income in the case of individuals and associations
of persons is proposed to be simplified. It is proposed that for such persons
the property income may not be clubbed with income under other heads and
may be taxed as a separate block of income. Income up to Rs. 200,000 shall
be exempt and income up to Rs. 2,000,000 shall be taxed in slabs of 5%,
10% and 15%. Income above Rs. 2,000,000 shall be taxed at 20%.
31
REVENUE MEASURES:
Mr. Speaker,
73.
Advance tax for alternate corporate tax - Advance tax is paid on the
sold after two years of acquisition. It is proposed that Capital Gain on disposal
of immovable properties be taxed at a rate of 10% if the property is sold within
five years of acquisition.
EXEMPTION TO PRINT AND ELECTRONIC MEDIA
Mr. Speaker,
78.
print and electronic media is 1%, whereas for others it ranges from 8-10% and
for low margin sectors it is up to 2%. It is proposed that in view of the peculiar
nature of the business of print and electronic media withholding tax for
providing or rendering services by print and electronic media be enhanced
from 1% to 1.5% and the withheld tax may be treated as the final tax in
respect of the income from these receipts. Concessionary rate of customs
duty on import of newsprint by newspapers and exemption from sales tax on
newsprint shall remain intact.
79.
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Extension in super tax - In the budget for the financial year 2015-16 a
tax on the income of the affluent and rich individuals, association of persons
and companies earning income above Rs. 500 million in tax year 2015 at a
rate of 4% of income for banking companies and 3% of income for all others
was levied. Since the circumstances that necessitated this measure are still
continuing, it is proposed to extend this measure by one year for Tax Year
2016.
82.
number of persons are filing sales tax returns with the provincial revenue
authorities but are not filing income tax returns. It is proposed that such nonfilers may be required to pay advance income tax monthly, to be collected by
provincial revenue authorities along with sales tax returns, at the rate of 3% of
turnover.
83.
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revenues is very low as compared to its share in GDP. Rate of WHT for
commercial bills up to Rs. 20,000 per month is fixed with various slabs. Rate
of WHT for commercial bills above Rs. 20,000 is 10%. ICAP and Pakistan
Business Council has recommended enhancing the rate of withholding tax for
commercial consumers. It is proposed to increase this rate to 12%. There will
be no change for industrial consumers.
87.
avoid higher rate of tax for non-filers at the time of purchase and registration
of vehicle by getting vehicles leased from various banks, leasing companies
etc and the vehicles are registered in the name of the leasing company or
bank. To avoid this misuse, it is proposed that an adjustable withholding tax
at the rate of 3% of the value of vehicle be collected by every bank/leasing
company etc from non-filers at the time of lease.
88.
companies - In line with the one basket approach for banking companies
introduced last year, it is proposed that income of insurance companies from
all sources may also be subjected to same corporate tax rate.
35
89.
- Compared to high profit margins of stock brokers, the withholding tax rate of
0.01% withholding tax on commission of members of Stock Exchange is quite
low. It is proposed that it may be enhanced to 0.02%.
DIFFERENTIAL WITHHOLDING TAX RATES FOR NON-FILERS ON PRIZE
BONDS
Mr. Speaker,
90.
Since prize bonds are bearer instruments, they are often used by tax
futures contracts - Through Finance Act, 2015 a transaction tax was levied
on trading of commodity futures contracts on Pakistan Mercantile Exchange
(PMEX). It is proposed that instead of tax on transaction, tax be levied at the
rate of 5% on actual capital gain as is being done for securities traded on
Stock Exchange.
93.
applicable only where turnover is above Rs. 50 M. It is proposed that this limit
may be reduced to Rs. 10 M.
TAXATION OF BUILDERS & LAND DEVELOPERS
Mr. Speaker,
94.
Bulk of the public savings are parked in housing sector and heavy
investments are made in real estate yet tax collection from this sector does
not match with level of investment and the profits earned. Association of
Builders and Developers has recommended that in order to bring this sector in
to tax net and to eliminate disputes a final tax regime may be devised for
builders and land developers. A final tax scheme on the basis of fixed tax per
unit area basis is proposed to be prescribed for builders and developers.\
95.
etc - Through Finance Act 2013, a withholding tax was imposed on airing of
foreign produced TV plays and serials only on landing rights channels. In
order to encourage locally produced plays and to enable the local production
houses to compete with the foreign productions, this withholding tax is now
proposed to be collected from all TV channels airing such foreign produced
content.
96.
produced advertisement shall collect withholding tax at the rate of 20% of the
payment.
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introduced in the Sales Tax and Federal Excise law during the current Budget:
-
Exclusion of second hand and worn clothing from further tax levy
- Sales tax on second hand and worn clothing is currently levied at
cumulative rate of sales tax of 10%. In order to provide some relief in
the prices of second hand clothing which are used by the common
citizens, it is proposed to reduce the tax rate to 8%.
38
introduced in the Sales Tax and Federal Excise law during the current Budget:
1) Abolition of zero-rated status of stationery items - Zerorating of stationery items is open to misuse. In order to prevent
the misuse, it is proposed that zero-rating on these items may
be converted to exemption.
2) Abolition of zero-rated status of milk - Milk, fat-filled milk and
preparations for infant use have been enjoying zero-rating
facility on supplies since the last so many years. As a result,
huge amounts of refunds are claimed by the dairy sector.
Despite this, the benefit of the facility is not passed on to the
consumers. Therefore, it is proposed that zero-rating on
preparations for infant use may be retained, while the zerorating on milk and fat-filled milk sold in retail packing is proposed
to be withdrawn. The exemption on milk and fat-filled milk will
remain intact.
FEDERAL EXCISE DUTY ON CEMENT
Mr. Speaker,
100.
5% of the retail price. It is proposed to replace the current regime with fixed
rate basis at the rate of Rs. 1 per kg.
101.
order to stop mis-declaration and to bring the tax structure in line with market
prices, the rates of sales tax on mobile phones are being rationalized. The
existing sales tax rates of Rs. 500 and Rs. 1,000 are proposed to be
increased to Rs. 1,000 and Rs. 1,500 for medium and high category mobile
39
phones respectively. The rate of tax on low category mobiles will remain
unchanged at Rs. 300.
102.
order to enhance revenue from this non-essential sector, and to keep pace
with inflation and discourage cigarettes smoking amongst the public the rates
of FED on cigarettes are proposed to be increased in two stages with first
stage ending on 30th November 2016. The increase in tax rate will be about
23 paisa per cigarette for lower tier cigarettes and about 55 paisa per
cigarette for higher tier cigarettes.
103.
waters is 10.5%, which is lower than the standard rate of FED. In order to
generate additional revenues from this growing sector, it is proposed that the
rate of FED on aerated water may be increased to 11.5%.
SIMPLIFIED REGIME FOR TIER-1 RETAILERS
Mr. Speaker,
104.
feed - Concessionary rates of Customs Duty and sales tax on major poultry
feed ingredients like soybean meal and vitamin premixes shall remain intact.
However, other ingredients that are subject to sales tax at the rate of 5% are
proposed to be subjected to sales tax at 10%.
106.
mostly unregistered and is not paying sales tax. The industry has agreed to
pay its share if the tax is collected through electricity bills. In order to bring this
40
Now the proposals related with Customs are being presented before
the house:
TARIFF SLABS REDUCTION
Mr. Speaker,
108.
with the larger world markets. Twenty first century is the era of Global Value
Chains (GVCs). No single economy can compete in the world market without
significant Foreign Value Added (FVA) component. To open the economy to
world competition and to protect the vulnerable domestic sectors has always
been a challenging task.
109.
Two years back, on the instructions of the Prime Minister, tariff reforms
This year the tariff slabs are being reduced from 5 to 4. The new
general slabs will be 3%, 11%, 16% and 20%. From next financial year, the
2% and 5% slabs will be merged in the new slab of 3%. This will reduce the
cost of import of more than two thousands items mostly machinery and raw
material and will pass on the benefit of Rs. 18 billion to the industrial sector of
the country. However, other items will continue to be subjected to customs
duty at the rate of 5% by shifting these items to the fifth schedule.
41
Mr. Speaker,
111.
technology in the country. It is, therefore, proposed that customs duty may be
withdrawn on the import of essential raw material for the manufacturers of
LED lights in the country. The scope of duty free import of renewable energy
technologies is also being expanded and streamlined.
AUTO DEVELOPMENT POLICY 2016-21
Mr. Speaker,
112.
agriculture and industrial sector and taking measures to protect the children
from malnourishment, the government is also striving to discourage the use of
those items which are considered health hazard. It is therefore, proposed that
Customs Duty may be enhanced from the current 10% to 20% and from Rs.
300/kg to Rs. 600/kg on the import of betel nuts and betel leaves respectively.
42
PART- III
Relief Measures
Mr. Speaker
114.
2)
3)
4)
5)
6)
7)
8)
9)
43
115.
The government is fully aware of the hard times that many of the
pensioners and their families are facing. For their welfare, the present
Government took several measures during last three years. The following
relief measures are being announced today for further welfare of pensioners
and their families:
1) 10% increase in net pension to all pensioners of federal
government with effect from 1st July 2016;
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estimated.
Concluding Remarks
Mr. Speaker
117.
We are cognizant of the fact that what we have achieved is not fully
commensurate with the potential of our people. Indeed, our true goal is to
enable our people to realize their dreams and inspirations. We are building a
Pakistan where it would be possible for such dreams to be realized. We have
made investments that would rid the country of years old menace of
loadshedding. Where there would be enough gas to meet the rising demand;
sufficient number of schools, universities, dispensaries and hospitals to cater
45
for the educational and health needs of our population. We are blessed with
worlds sixth largest and youngest population. It is not the destiny of our
people to live in darkness or be deprived of basic amenities of life. We are a
Islamic nation, and a responsible nuclear power. We need a strong and
prosperous economy. This is our final destination, for which we have laid a
very solid foundation. But the path to reforms is long and torturous, which is
traversed only by those nations that show consistency and determination.
This is exactly our resolve and we would fulfill its demands.
49.
For sometime, I have been requesting political parties that our country
gains we have so far made and punctuate our journey to a rising growth
trajectory. Federal PSDP of Rs.800 billion and provincial investments of
Rs.875 billion will take public sector development spending to Rs.1675 billion,
which is nearly 5.7% of GDP. Together with investments in private sector, the
investment to GDP ratio will rise to significant level that will support the
achievement of the growth rate of 5.7% which will create job opportunities for
our youth. In addition, due to poverty alleviation programs, poverty will reduce.
51.
52.
Mr. Speaker,
53.
present the next years budget. And I am also grateful to you and pray to Allah
that He makes things easy as they have been in the past years.
Pakistan Paindabaad
47