Key highlights of Rs 5.4 trillion Punjab budget

The Punjab government, led by the Pakistan Muslim League-Nawaz (PML-N), presented its annual budget for the fiscal year 2024-25, amounting to Rs5.45 trillion on June 13, sparking significant debate, especially given the Rs630 billion surplus, and the decision not to properly tax the agriculture and real estate sectors despite pressure from the International Monetary Fund (IMF).

Currently, income from agriculture is taxed at a lower rate than regular personal income, a point of contention for the IMF, which has been pushing for these incomes to be taxed equally to eliminate discrepancies.

Provincially, the government collects a 1% stamp duty and a 1% corporation fee on the total value of property during transfers. These rates remained unchanged in the new budget, with no increases in current agricultural taxes, which may pose challenges in meeting revenue targets.

Punjab Finance Minister Mujtaba Shujaur Rehman, in his budget speech, highlighted an Annual Development Program (ADP) of Rs842 billion, marking a 28% increase from the previous year’s Rs655 billion.

Key allocations were made for education, health, and agriculture, with new initiatives like the laptop and Kissan card schemes.

Rehman emphasized that the surplus budget aligns with Chief Minister Maryam Nawaz’s vision for her first 100 days in office, describing it as Punjab’s largest tax-free and surplus budget. The budget documents revealed a surplus of Rs630 billion.

Free solar panels

One significant proposal is the distribution of free solar panels to households consuming up to 100 units of electricity per month.

Adjustments in provincial fees and taxes

Additionally, various provincial fees and taxes have been adjusted. Amendments to the Court Fees Act of 1870 increased fees significantly; for instance, a Re1 fee rose to Rs100, and a Rs5 fee to Rs500.

The Stamp Duty Act of 1899 was also updated, increasing the value of Rs100 stamp papers to Rs1,000 and Rs1,200 papers to Rs3,000.

Changes in property taxes

Changes to the Punjab Urban Immovable Property Tax Act of 1958 introduced a self-assessment mechanism.

Property tax will now be collected based on the property’s capital value rather than its rental value. The government will have the authority to designate any property as high-value, with property owners required to self-assess their property value. However, the assessing authority can audit these assessments, and fines will be imposed for underpayment or tax evasion.

If a property is not self-assessed, owners will have a two-week grace period. For capital value tax collection, residential properties worth up to Rs 5 million will be exempt, while commercial properties of the same value will be taxed at 0.07%. Properties valued between Rs5 million and Rs10 million will be taxed at 0.07%, those between Rs10 million and Rs25 million at 0.08%, and properties over Rs25 million at 0.09%.

Upgradation of motor vehicle registration

The budget also updated the motor vehicle registration regime, transitioning from engine capacity to the vehicle’s total value to enhance fee collection. Rehman underscored the budget’s focus on business growth and public relief, highlighting the 100% cash-covered ADP and efforts to reduce government size and expenditures while increasing revenues without overburdening the poor.

Projected revenue in budget

The budget projected a revenue of Rs4.643 trillion against expenditures of Rs4.816 trillion. The government expects Rs3.683 trillion from the federal divisible pool under the NFC award, with provincial revenue collection targeted at Rs960 billion, a 54% increase from the current year.

This revenue target includes Rs300 billion from the Punjab Revenue Authority (PRA), Rs105 billion from the Board of Revenue (agricultural tax), Rs57 billion from Excise and Taxation, and Rs488 billion from non-tax revenue.

Salary increase

The budget proposed a 25% salary increase for government employees in grades 1 to 16, a 20% raise for officers in grades 17 to 22, and a 15% increase in pensions.
The minimum wage will rise from Rs32,000 to Rs37,000. A total of Rs603 billion is allocated for salaries, Rs451.4 billion for pensions, and Rs857 billion for local governments.

Health and Education

In health and education, the education budget was increased by 13% to Rs669.74 billion, with Rs604.3 billion for non-development expenses and Rs65.5 billion for development.
Health sector allocation stood at Rs539.15 billion, with Rs410.55 billion for non-development and Rs128.60 billion for development expenses.

Significant funds were earmarked for road rehabilitation, fisheries and wildlife, and women’s development.

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