Federal govt likely to present Rs9,300 billion deficit budget on June 7

ISLAMABAD: Pakistan’s federal budget for the upcoming fiscal year (FY2024–25) is expected to be unveiled on June 7, with total expenditure expected to reach Rs 16,700 billion.

According to preliminary estimates, the expenditure on interest and loans will be around Rs 9,700 billion, while subsidies are estimated at Rs 1,500 billion.

Tax revenue is projected to exceed Rs 11,000 billion, with direct taxes expected to generate Rs 5,300 billion and federal excise duty Rs 680 billion. Sales tax is expected to generate over Rs 3,850 billion, while customs duty is expected to generate over Rs 1,100 billion.

Non-tax revenue is estimated at Rs 2,100 billion, with the petroleum levy expected to contribute Rs 1,100 billion. Sources further said that the federal budget deficit is likely to be around 9300 billion rupees.

Earlier reports said that the Pakistani government may end the tax exemption in the budget for the financial year 2024–25 at the request of the IMF.

Additionally, there are discussions to impose a sales tax on tractors and pesticides, which could lead to a rise in the prices of these key agricultural inputs.

Currently, under the Sixth Schedule of the Sales Tax Act, pesticides and registered tractors are exempt from sales tax. However, consideration is being given to scrapping these exemptions and introducing a lower rate of sales tax on both tractors and pesticides in the next financial year.

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Such measures could significantly impact farmers, increase the cost of agricultural machinery and pesticides, and place a substantial burden on those who depend on these products.

Additionally, commercial importers may face a withholding tax in the upcoming budget, which aims to fetch an additional Rs 30 billion in taxes.

The IMF has stressed the need for “strong cost-side reforms ” to restore the viability of Pakistan’s energy sector.