Corona (COVID-19) Global Stats

Federal Cabinet approves 10pc increase in pensions, salaries of govt employees

Minister for Finance and Revenue Shaukat Tarin on Friday presented the Federal Budget 2021-22 in the National Assembly with a total outlay of Rs 8,487 billion amid rumpus created by the opposition parties.

His speech was marred by the chaotic environment as opposition members chant slogans to interrupt his speech.

Presenting the budget, the finance minister said that many challenges came our way this year but we tackled them all under the leadership of PM Imran Khan.

“When the Pakistan Tehreek-e-Insaf (PTI) came into power, the previous governments had taken many loans,” he said and added no government had faced such a situation before. The current account deficit was $20 billion.


Shedding a light on the negligence of the previous governments, Tarin said Pakistan has become a food-deficit country due to years of negligence, adding that inflation has created troubles for low income peoples. He has said that sugar prices increased by 18 percent.

“We need to make Pakistan food sufficient and for this purpose, we need to focus agriculture,” said Tarin, vowing to bring reforms for the agriculture sectors.

He says that Covid-19 caused huge trouble for the government and now the governments  debts have fallen down. “4.8 is the target of our future growth,” he has explained.

The minister went on to say that the previous government kept dollar at 104 rupees at artificial levels, adding that this level led to increase in heavy borrowing. He said, “During the tenure of previous government, domestic borrowing had increased substantially, adding at least Rs 14 trillion worth fresh loans were taken.”

PTI government 

The finance minister further said that the government faced the biggest challenge of saving the country from bankruptcy. “We adopted the policy of reducing the expenditures and increasing the income,” he said.

Tarin said the government faced waves of coronavirus. “During the coronavirus pandemic, 12 million families had been provided financial assistance through Ehsaas Emergency Cash Program,” he added.

He claimed that the per capita increased by 15 percent despite the coronavirus pandemic. “We have overcome the current account deficit. A record increase of 25% has been made in remittances. We face the challenge of inflation,” he declared. The minister said that exports witnessed a 14 percent increase.

The finance minister said the main objectives of the budget are to strike a balance between fiscal deficits due to COVID-19 and boosting growth of economy besides keeping a primary balance at a sustainable level.

He said the gross revenues for the next fiscal year have been estimated at Rs 7909 billion compared to revised estimate of Rs 6395 billion for the outgoing fiscal year. This shows a handsome growth of 24 percent in gross revenues. The Minister said the FBR revenues are projected to grow by 24 percent from Rs 4691 billion to Rs 5829 billion. Non-tax revenues are projected to grow by 22 percent.

Shaukat Tarin said the provincial share in federal taxes would increase from Rs 2704 billion last year to Rs 3411 billion. This means an additional Rs 707 billion or 25 percent increase. He said this should enable the provinces to spend resources on development and critical social sectors like health, education, population welfare, youth, women development, sports and labour welfare.

After provincial transfers, the net federal revenues are estimated at Rs 4497 billion compared to Rs 3691 billion under the revised estimate for last year. This shows a growth of about 22 percent. The overall deficit for 2021-22 is estimated at 6.3 percent as opposed to the revised estimate of 7.1 percent for current fiscal year. Primary deficit is targeted at 0.7 percent. Despite COVID-19, the government has continued on the path of reduction of primary deficit, which he said is a great achievement.

Tarin said the federal development spendings are being increased from Rs 630 billion to Rs 900 billion, which is an increase of around 40 percent.

He said it is imperative that government expenditures are minimized and their utility is ensured. Therefore, he said, we will continue to be austere throughout the government. He said subsidies are projected at Rs 682 billion up from Rs 430 billion. These mostly comprise due payments of Independent Power Producers, tariff differential subsidies and concessions on food.

The minister said PM Imran Khan wants to change the course of the history by uplifting four to six million low income households through bottom-up approach from next year. He said every household will be provided Rs 500,000 interest free business loans. Every farming household will be given Rs 2050,000 interest free farming loan and Rs 200,000 for tractors and machineries. These families will be provided with low interest housing loans up to two million rupees so that they can build their houses. Every household shall be provided with a Sehat Card and one percent from every household will be provided free technical training. Through this action we are giving a comprehensive package to the low-income group people; slogan of which was raised by many leaders in the past but nothing was delivered. He said this is an essential requirement of Imran Khan s promise of Riasat-e-Madina.

He said the major initiative of the government for social protection and poverty alleviation is the Ehsaas Programme. For this program, Rs 260 billion are being proposed in the next budget, which is by far the largest allocation and reflects the vision of the Prime Minister to help the extreme poor segments of the society.


Tarin said remittances had increased in Pakistan to record levels, adding that these are expected to rise to $29 billion by the end of this month. “This is proof of the love that overseas Pakistanis harbour for Prime Minister Imran Khan,” he said.


He said, “The Budget 2020-21 seeks inclusive and sustainable growth. We hope to increase our growth rate to 4.8 per cent.” “We want to make sure of a growth rate of 6% to 7% in the next two to three years,” Pakistani Finance Minister Shaukat Tarin said as he addressed the budget session in parliament.

“We want to focus on the poorer segments of society,” he said and added we want them to be able to fulfill their dreams.

The minister said the government will provide Rs500,000 loans to the poor, and Rs150,000 loans to farmers, adding that under the low-cost housing scheme, the government will give Rs2 million loans to them so that they are able to build their houses. They will be given Sehat cards and technical training.

Funds allocated 

  • The government has allocated Rs260 billion for the Ehsaas programme.
  • The government has allocated Rs900 billion for public sector development programmes. 
  • The government has allocated Rs12billion for agriculture.
  • The government has allocated Rs23 billion for Diamer and Bhasha dams.
  • The government has allocated Rs14 billion for Neelum-Jhelum hydro-power plant.
  • The government has allocated Rs 489.393 million Narcotics Division
  • The govermemnt has allocated Rs 6,027.351 million for Law and Justice Division schemes.
  • The government has allocated Rs 4461.911 million for Maritime Affairs.
  • The government has allocated Rs244 billion for Gwadar airport and highway.
  • The government has allocated Rs25 billion for small dams in Sindh.
  • The government has allocated Rs118 billion for energy and power projects.
  • The government has allocated Rs22 billion for Jamshoro coal power plant.
  • The government has allocated Rs16 billion for KI, KII projects in Karachi and Tarbela power plant.
  • The government has allocated Rs100billion for special development packages for the development of poorer cities.
  • The government has allocated Rs54 billion for the development of KP’s merged districts.
  • The government has allocated Rs14 billion for tree plantation programmes and combatting climate change.
  • The government has allocated Rs739 for Karachi transformation plan.
  • The government has allocated Rs100 billion for covid-19 emergency fund.
  • The government has allocated Rs1.1 billion for the procurement of coronavirus vaccines.
  • The government has allocated Rs12 billion for SME support programmes.
  • The government has allocated Rs10b for Kamyab Naujawan programme.
  • The government has allocated Rs66 billion for HEC and education programmes.
  • The government has allocated Rs60 billion for Azad Jammu and Kashmir.
  • The government has allocated Rs47 billion for Gilgit-Baltistan.
  • The government has allocated Rs1,373 billion for Defence Services.
  • The government has allocated Rs 66 billion for Higher Education Commission (HEC).
  • The government has allocated Rs 8,341 million for Science and Technology Research Division.

Key Features 

  • All government employees to get 10% adhoc relief allowance from July 1, 2021
  • Pension to get 10 percent raise from July 1, 2021
  • From grade 1 to 5 government allowance to get increase allowance to Rs 900 from Rs 400
  • Minimum wage increased to Rs 20000 per month
  • On 300 active pharmaceutical industries have been exempted from customs duties
  • On several raw material used in industries has been either exempted or duties have been reduced
  • Total incentives due to lowering of duty will amount to Rs 25 billion a year
  • Tax lowered on warehousing, logistics services and collateral from 8% to 3%
  • Withholding exempted on Electronic warehouse receipts of PME
  • Telecommuincation sector has been given industrial status
  • Special technology Zone would be established aimed with 10 year tax holiday
  • Imports of capital goods would be duty free for technology zones
  • SMEs having a turnover of Rs 100 million per year have to pay tax of 0.25%
  • Sme turnover of rs 100 million to Rs 250 million tax levy of 0.5%
  • Government to introduce one pager tax return document for SME
  • IT sector would be for freelance and other services
  • Final regime tax for IT sector would be 1percent and no question would be asked
  • Wholesaler and retailers and AOPs minimum tax limit has been increased
  • Minimum tax level has been raised to Rs 100 million
  • Proposed that turnover tax and withholding tax will be levied on other sector which are active payer list
  • Number of Real time point of sale in two years will be increased to five lac from 11000 retailers
  • Propose on individuals and AOPs minimum tax rate to be raised from Rs 10 million to Rs 100 million
  • Tax rate to be reduced to 1.25% from 1.5%
  • Every year tax rate will be reduced
  • Capital gains tax has been reduced to 12.5% to 15%
  • Withholding tax on mobile phone reduced to 10% from 12.5%
  • Tax rate will be reduced to 8%
  • Federal excise duty has been imposed on usage of over three minute calls and SMS
  • Withholding tax on 12 sectors have been removed
  • Sectors are banking transactions, PSX, margin financing, air travel service, debit and credit cards on overseas buying
  • Sales tax on 850 cc cars reduced to 12.5% from 17% 


Continuing his budget speech, Tarin said that the government had set the tax collection target at Rs5,829 billion. He said the tax collection had grown by 18%, adding that critics had no response to the government s impressive performance in this regard.

The minister said there was no new tax being imposed on the salaried class.

He said the government was slashing withholding taxes on mobile phones, and it will be reduced to 8 percent.

The finance minister announced that the government has also cut down sales tax on locally manufactured cars from 17 percent to 12.5 percent and has also exempted Federal Excise Duty (FED) on 850cc cars and will slash duty on electric cars.

He said the track-and-trace systems will be strengthened so that undocumented trade does not flourish in the country.

Tarin announced a tax exemption on  Auto Disable Syringes  with an aim to minimise the impact of deadly diseases like Covid-19, while FED on telecommunication has been reduced from 17pc to 16pc.

He said zero rating on export on IT and IT-enabled services is being proposed by amending ICT (Tax and Services) Ordinance 2001. He said federal excise duty is being withdrawn on industries related to cooking oil, ghee and steel products in erstwhile FATA and PATA. FDE is also being withdrawn on juices, which was earlier imposed through Finance Act 2019.

He said a cottage industry having annual turnover of over ten million rupees will no longer be required to register for sales tax.

To facilitate the registered persons and enhancing ease of doing business, we are allowing constructive payment for adjusting payable and receivable under Section 73 of Sales Tax law.

He said removal of restriction on input tax allowance under sales tax law has been a major demand from business community. However, considering the importance of minimum value addition on VAT model, it is proposed to eliminate this restriction on highly regulated corporate sector that is public limited companies listed on Pakistan Stock Exchange. This would be a major breakthrough for major corporatization of economy and facilitation of regulated corporate sector.

Shaukat Tarin said it is proposed to grant exemption on import of high quality art and printing paper for the purpose of printing and publication of Holy Quran.

Shaukat Tarin said special technology zones are being established throughout the country and to encourage investment in these zones tax exemption on import of plant, machinery, equipment and raw material is being proposed.

Shaukat Tarin said it is being proposed to bring thirty party sales made through online market places within the purview of sales tax.

He said FED on mobile phone calls exceeding three minutes, internet data usage and SMS messages is being proposed.

He said sugar is being proposed to be included in the third schedule to the Sales Tax Act so that tax is charged on actual retail price of the product. This measure would not only ensure due payment of tax but also help in putting a more effective price control mechanism.

The Minister said we have carried out an in depth exercise to review tax exemptions under sales tax and identified number of non-essential items for withdrawal from the purview of exemption. The same exercise has also been done in respect of reduced rates of taxation. This has been done by excluding exemptions currently available for ordinary food, education and health related items.

Salaries and Pensions 

The finance minister announced the grant of 10 percent ad-hoc relief allowance for all the federal government employees and a 10 percent increase in pensions with effect from next month.

The orderly allowance has been enhanced from Rs 14,000 to Rs 17,500. The integrated allowance for employees in the basic pay scale 1 to 5 has been doubled from Rs 450 to Rs 900.

The finance minister said that the minimum wage is proposed to be increased to Rs 20,000 to mitigate the inflationary pressures on the low-income groups.

Regional Disparities 

Referring to the special development packages announced for different regions, the Finance Minister said 20 billion rupees have been earmarked for accelerated development plan for Southern Balochistan, 25.4 billion rupees for Karachi Transformation Plan, 40 billion rupees for socio-economic development of Gilgit-Baltistan and 19.5 billion rupees for development of different districts of Sindh. He said the government attaches special attention to the development of tribal districts and has increased allocation for them to 54 billion rupees. This includes 30 billion rupees for 10 yea development plan.

Social Sector 

The Finance Minister said the government has made social sector improvement the key priority in areas like health, education, sustainable development goals, climate change for which 118 billion rupees have been proposed in the PSDP. This includes thirty billion rupees for health, forty four billion rupees for higher education and sixty eight billion rupees for achievement of SDGs.

Leave a Comment

Your email address will not be published.