Finance Minister Ishaq Dar Wednesday tabled the Finance Bill 2023 — or the “mini-budget” — in the National Assembly as the government seeks to meet the preconditions for unlocking the $1.1 billion International Monetary Fund (IMF) loan.
Running against time to pacify the IMF for the revival of the bailout programme, the government had last night approved hiking the General Sales Tax GST rate from 17 to 18% and increasing the Federal Excise Duty (FED) on cigarettes in order to fetch an additional Rs115 billion out of Rs170 billion agreed to by Pakistan in line with the IMF conditions.
Through the “mini-budget”, the Pakistan Democratic Movement (PDM)-led government aims to reduce the budget deficit and broaden its tax collection net — in order to meet the conditions laid forth by the Washington-based lender.
- Increase in GST on luxury items from 17% to 25%
- FED on business and first-class air tickets be increased to Rs20,000 or 50% — whichever is higher
- 10% withholding adjustable advance income tax to be imposed on bills of wedding functions
- Increase in FED on cigarettes, soft and sugary drinks — from Rs1.5 per kg to Rs2 per kg
- Increase in GST from standard 17% to 18%
- GST to not be imposed on essential goods — wheat, rice, milk, pulses, vegetables, fruits, fish, eggs, meat
- BISP stipend to be increased; govt to allocate Rs400 billion for programme
More to follow…