ISLAMABAD: The Federal Cabinet has approved the Budget 2020-21. It has been decided not to increase the salaries and pensions of government employees in the budget. Will be maintained. According to media reports, a meeting of the Federal Cabinet was held under the chairmanship of Prime Minister Imran Khan. The meeting reviewed the proposals for the next financial year 2020-21.
It was stated in the meeting that in view of the current economic situation, no increase should be made in the salaries of government employees. As a result, it has been decided not to increase the salaries and pensions of government employees in the budget. It was decided that the salaries and pensions of government employees would not be reduced but the salaries and pensions would be maintained at last year's level.
It may be recalled that Federal Minister Hamad Azhar will present a budget deficit of Rs 34 billion in the National Assembly today. It is proposed to keep the target at 2.1 per cent, bring inflation to 6.5 per cent in the next financial year, 2.8 per cent growth rate in the agricultural sector, 3.4 per cent growth target in the construction sector, negative growth target of 2. It is proposed to set a growth target of 5%, services sector 2.6%, power generation and gas distribution sector 1.4%.
It should be noted that this is the second budget of the PTI government. The budget for the financial year 2020-2021 is being kept at Rs. 7600 billion while the tax revenue target can be set at Rs. 4950 billion. Sources said that the deficit is likely to be more than Rs 3427 billion. It is estimated that Rs 3235 billion will be spent on interest and repayment of loans. Rs 1402 billion could be spent on defense.
The federal budget is likely to spend Rs 475 billion on pensions. A budget of Rs 495 billion can be set for federal ministries and departments. The federation can spend Rs 260 billion on subsidies. The federal government can release Rs 820 billion in grants. The federal development budget will be set at Rs 650 billion. Budget decisions on salaries and pensions for government employees are generally permanent, but given the IMF's possible conditions, this tradition is unlikely to continue this year.
There is no denying that the Corona virus has had a devastating effect on the Pakistani economy. For the first time since 1952, the growth rate is going to be negative. Businesses are slowing down, which has a direct impact on tax revenue. will have. Declining exports and declining remittances have put pressure on external accounts. So far, about 30 percent of those working abroad have lost their jobs, with a direct impact on future income. Will have to. Given the growing proportion of the population and the increase in the number of young people, Pakistan needs 2.5 million jobs a year which can only be achieved if the growth rate is 7% but on the contrary Pakistan's growth rate is expected to be negative 1.5. About 1.2 million people have lost their jobs.
In view of these circumstances, the budget should be prepared in such a way that all the problems and their possible solutions can be presented in a better way. If the revenue is looked at, the target should not exceed Rs. 4 trillion. No matter what you say, ignoring the facts will cause problems and nothing. Since the economy has almost shrunk, the target should be as close to reality as possible. Last year, the IMF's tax revenue target was Rs 5,500 trillion, which was raised to Rs 5,300 billion after begging, despite a flurry of taxes on the people, claims to reduce government spending and two amnesty schemes a year. Even the tax target could not be achieved. Rs 3,900 billion tax was collected and a shortfall of Rs 1,400 billion. This year, the IMF wants to set a tax revenue target of Rs 5,100 billion, which will be almost impossible to meet. Sources said that the International Monetary Fund (IMF) has called for the abolition of sales tax exemption in all sectors. Tax rates for non-filers are likely to be increased. Income tax for non-filers and FED will be increased. It is also proposed to increase the GST rate for non-filers from 17%. According to sources, there is no possibility of any income tax exemption for the salaried class. The facility of input tax credit to unregistered persons may also be abolished. According to sources, holding tax on foreign currency transactions may be imposed in the budget for the new financial year. Presumably, a proposal to impose a holding tax of 0.6% to 1% on foreign currency transactions is under consideration. According to sources, federal excise duty may be levied on e-cigarettes, it is proposed to increase the scope of advance income tax, advance income tax may be extended to dealers, distributors, retailers, according to sources. It is proposed to increase the holding tax on electricity bills up to Rs 33,000 to 5% to 7.5%, holding tax on bills up to Rs 33,000 to 66,000 10% and holding tax on bills above Rs 66,000 15%. Is suggested. Earlier, a special chapter on corona virus was included in the National Economic Survey Report. According to the survey, 56.6% of the country's population became socially and economically insecure due to the epidemic.
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