Pakistan’s federal budget for the upcoming fiscal year (FY2024-25) is anticipated to be unveiled on June 7, with projected total expenditure reaching Rs 16,700 billion.
Initial estimates suggest expenditure on interest and loans to be around Rs 9,700 billion, while subsidies are estimated at Rs 1,500 billion.
Tax revenue is forecast to exceed Rs 11,000 billion, with direct taxes contributing Rs 5,300 billion and federal excise duty anticipated to yield Rs 680 billion. Sales tax is projected to generate over Rs 3,850 billion, while customs duty is expected to yield more than Rs 1,100 billion.
Non-tax revenue is estimated at Rs 2,100 billion, with the petroleum levy expected to contribute Rs 1,100 billion. The federal budget deficit is projected to be approximately Rs 9,300 billion, sources added.
Earlier reports suggested that the Pakistan government might eliminate tax exemptions in the FY2024-25 budget at the behest of the IMF.
Furthermore, there are discussions regarding imposing sales tax on tractors and pesticides, potentially resulting in price hikes for these crucial agricultural inputs. Currently, under the Sixth Schedule of the Sales Tax Act, pesticides and registered tractors are exempt from sales tax. However, there are deliberations to remove these exemptions and introduce a lower sales tax rate on both tractors and pesticides in the upcoming fiscal year.
Such measures could significantly impact farmers, raising the cost of agricultural machinery and pesticides, and placing a substantial burden on those reliant on these products.
Additionally, commercial importers may face withholding tax in the forthcoming budget, aimed at generating an additional Rs 30 billion in taxes.
The IMF has emphasized the need for “strong cost-side reforms” to restore the viability of Pakistan’s energy sector.
