President gives assent to tax-laden finance bill

July 01, 2024 (MLN): President Asif Ali Zardari on Sunday accorded his approval to Finance Bill 2024 for the new fiscal year.

The Finance Bill will be effective from July 01, 2024, President Secretariat Press Wing said in a press release on Sunday.

On June 28, the National Assembly passed the Finance Bill, 2024 with certain amendments, adopting the financial proposals for the fiscal year beginning on July 01, 2024.

The government had presented the national budget on June 12 with a challenging tax revenue target of Rs13 trillion for the year starting July 01, up about 40% from the current year, to strengthen the case for a new rescue deal with the International Monetary Fund (IMF).

The rise in the tax target is made up of a 48% increase in direct taxes and a 35% hike in indirect taxes over revised estimates of the current year. Non-tax revenue, including petroleum levies, is seen increasing by 64%.

The tax would increase to 18% on textile and leather products as well as mobile phones besides a hike in the tax on capital gains from real estate.

Workers will also get hit with more direct tax on income.

Pakistan has projected a sharp drop in its fiscal deficit for the new financial year to 5.9% of gross domestic product (GDP), from an upwardly revised estimate of 7.4% for the current year.

Pakistan's central bank has also warned of possible inflationary effects from the budget, saying limited progress in structural reforms to broaden the tax base meant increased revenue must come from hiking taxes.

The upcoming year's growth target has been set at 3.6% with inflation projected at 12%.

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