Welcome to our comprehensive overview of the recently announced budget for the financial year 2023-2024. In this article, we will delve into the salient features, guiding principles, and relief measures outlined by the federal government.
By providing detailed insights and analysis, we aim to equip you with valuable information that can help you understand the implications of this budget and its impact on various sectors. Let's dive in!
Guiding Principles
The budget for the financial year 2023-2024 is built upon a set of guiding principles that underpin the government's vision for economic growth, trade facilitation, and development. These principles include:
1. No Increase in Duties on the Import of Essential Items
To ensure the availability and affordability of essential goods, the government has committed to maintaining the duties on the import of essential items at the current levels. This step aims to alleviate the burden on consumers and foster a conducive environment for economic stability.
2. Trade Facilitation and Ease of Doing Business
Recognizing the importance of international trade for economic progress, the government aims to enhance trade facilitation measures and streamline business processes. By reducing bureaucratic hurdles and promoting efficient trade practices, the budget seeks to create an enabling environment for both local and foreign businesses.
3. Encourage Industrialization and Investment
To stimulate industrial growth and attract foreign investment, the budget introduces various incentives and measures. These initiatives aim to promote the establishment of new industries, encourage existing industries to expand, and foster innovation and technological advancements.
4. Incentives for the Agriculture Sector
Acknowledging the significance of agriculture in the national economy, the budget incorporates incentives to support the agricultural sector. These measures aim to enhance productivity, ensure food security, and improve the livelihoods of farmers by providing them with necessary resources, technology, and financial support.
5. Promotion of Energy Efficiency & Conservation
Emphasizing the importance of sustainable development, the budget places a strong focus on energy efficiency and conservation. Through the promotion of renewable energy sources, adoption of energy-efficient practices, and investment in green technologies, the government aims to reduce carbon emissions and create a cleaner and more sustainable future.
6. Promotion of Information Technology (IT) and IT-enabled Services
Recognizing the potential of the IT sector in driving economic growth, the budget introduces measures to promote information technology and IT-enabled services. By facilitating the growth of this sector, the government aims to harness its transformative power and create employment opportunities for the youth.
Relief Measures
The financial year 2023-2024 budget includes a range of relief measures aimed at providing support and incentives to various industries. These measures are designed to stimulate growth, encourage investment, and foster economic resilience. Let's explore some of the key relief measures:
1. Exemption of Customs Duties for Printing Holy Quran Materials
To facilitate the printing of the Holy Quran, the budget grants an exemption on customs duties for specific papers, art cards, and boards used in the printing process. This measure aims to support religious literature production and encourage accessibility to religious texts.
2. Incentives for the Pharma Sector
The budget extends an incentive to the pharmaceutical sector by including one more Active Pharmaceutical Ingredient (API) and three drugs in the existing duty-free regime. This measure aims to boost local pharmaceutical manufacturing and improve access to essential medicines.
3. Incentives for Solar Panel Manufacturing
To promote the adoption of renewable energy sources, the budget exempts customs duties on the import of machinery, equipment, and inputs used in the manufacturing of solar panels and allied equipment. This measure aims to encourage investment in the solar energy sector and reduce dependency on traditional energy sources.
4. Incentives for IT Exporters
Exporters in the Information Technology (IT) and IT-enabled services sector are eligible for an incentive that allows duty-free import of IT-related equipment equivalent to 1% of the value of their export proceeds. This measure aims to support IT exporters, enhance their competitiveness, and foster growth in the IT industry.
5. Reduction of Customs Duties on Industrial Inputs
To facilitate industrial production, the budget reduces customs duties and additional customs duties on the import of intermediary and industrial inputs falling under specific PCT codes. This measure aims to lower production costs for industries and enhance their global competitiveness.
6. Exemptions and Concessions for Specific Industries
The budget provides exemptions and concessions on customs duties for various industries, including manufacturers of diapers, sanitary napkins, adhesive tape, capacitors, heavy commercial vehicles, hemodialyzers fluid/powder, and more. These measures aim to support local manufacturing, promote economic activity, and create employment opportunities.
7. Alignment with Auto Industry Development and Export Policy
The budget aligns Part(V) of the Fifth Schedule to the Customs Act with the Auto Industry Development and Export Policy (AIDEP) 2021-26. This measure aims to promote the development of the auto industry, attract investment, and enhance exports.
8. Promoting Agriculture and Food Production
To promote growth in the agricultural sector, the budget exempts customs duties on the import of seeds for sowing, shrimps/prawns/juveniles for breeding in commercial fish farms and hatcheries, and roasted peanuts for manufacturing ready-to-use supplementary foods. These measures aim to enhance agricultural productivity, improve food security, and support local food manufacturing.
9. Regulatory Duty Reforms
The budget introduces regulatory duty reforms, including the removal of regulatory duty on second-hand clothing, the reduction of regulatory duty on specific PCT codes related to second-hand clothing, fish, tiles, and sports goods, and the removal of regulatory duty on IT-related equipment. These measures aim to support various industries, provide relief to consumers, and promote trade.
Guiding Principles:
- No increase in duties on the import of essential items
- Trade facilitation and ease of doing business
- Encouragement of industrialization and investment
- Incentives for the agriculture sector
- Promotion of energy efficiency and conservation
- Promotion of Information Technology (IT) and IT-enabled services
Relief Measures:
- Exemption of Customs duties on specific papers and art cards for printing the Holy Quran
- Incentives for the Pharma sector by including additional drugs in the duty-free regime
- Exemption of customs duties on the import of machinery and equipment for manufacturing Solar Panels
- Duty-free import of IT-related equipment for exporters of IT and IT-enabled services
- Reduction of Customs duties on import of intermediary/industrial inputs
- Exemption of Customs duties on raw materials for various manufacturing industries
- Reduction of Customs duty on import of Heavy Commercial Vehicles (HCVs)
- Extension of exemption on machinery and equipment imported by erstwhile FATA areas
- Continuation of concession on import of Flavouring powders for food preparation
- Exemption of Customs duty on various raw materials for manufacturing purposes
- Alignment of Customs Act with Auto Industry Development and Export Policy (AIDEP) 2021-26
- Exemption of Customs duties on the import of seeds for sowing
- Exemption of Customs duties on import of shrimps/prawns for breeding
- Exemption of Customs duties on roasted peanuts for manufacturing of supplementary foods
- Removal of regulatory duty on second-hand clothing
- Reduction of regulatory duty on various goods including second-hand clothing, fish, tiles, and sports goods
- Removal of regulatory duty on IT-related equipment
- Removal of regulatory duty on certain goods like Synthetic Filament Yarn, parts for flat panels, monitors, projectors, and Silicon Steel Sheets
- Exemption of Regulatory Duty on special steel round bars and rods of non-alloy
- Increase/levy of regulatory duty on Carbides of Calcium
- Miscellaneous changes related to PCT codes and legislative provisions
Revenue Measures:
- Withdrawal of capping of fixed duties and taxes on import of old and used vehicles
- Legislative changes related to smuggling, anti-smuggling operations, and penalties
- Streamlining measures to reduce congestion, enhance warehousing period, and facilitate trade
- Rationalization of penalty on documents and adjudication process
- Simplification of baggage declaration for group travelers
- Stringent provisions for duty evasion and attempts to evade taxes
Sales Tax Measures:
- Extension of sales tax exemption for specific goods and services
- Withdrawal of sales tax exemption on certain edible products sold in bulk
- Increased sales tax rate for specific supplies
- Streamlining measures for tax returns, definitions, and exemptions
ICT (Tax on Services) Measures:
- Taxation of specific food service outlets
- Taxation of electric power transmission services
- Streamlining measures for freelance exporters and IT-based services
Income Tax Measures:
- Rationalization of Super Tax rates
- Re-imposition of withholding taxes on cash withdrawals, import of goods, and payment to non-residents
- Additional tax on extraordinary gains, penalties, and exemptions for specific sectors and activities
These are the main highlights of the budget for the financial year 2023-2024, including relief measures, revenue measures, and streamlining measures in various sectors such as customs, sales tax, ICT, and income tax.
