The federal government on Monday shared about RS17.5 trillion worth of new budget frames with its most important allies – Pakistan Peoples People – which approved an 18% increase in defense expenses due to tension with India, but called the distribution of development inadequate.

As this year, the government is planning to reveal a financially close stabilization budget that is being constructed around a very high primary surplus target, according to a briefing given to the PPP delegation, led by Bilawal Bhutto Zardari.

PPP, which provides crucial support to the government of the National Assembly, met with Prime Minister Shehbaz Sharif and his financial team to discuss the budget.

The size of the budget is lower than the RS18 trillion, which is less than this year’s budget due to steep reduction in interest expenses on the back of an 11% cut in the political rate of the central bank.

However, there was a consensus between PML-N and PPP to increase the defense budget due to the recent wave of tension with India, the sources said. They said PPP supported the proposal to increase the defense budget by 18% to over RS2.5 trillion in the light of the prevailing security threats.

Both parties had divergent views on the next financial year’s public sector development program. The government has proposed RS1 trillion PSDP; However, PPP asked for a larger allocation.

For this financial year, RS1.1 trillion had been awarded, but the expenses fell far behind the award. One of the participants proposed to set PSDP at this year’s actual level of spending, which will be significantly lower than the proposed allocation of RS1 trillion.

Planning Minister Ahsan Iqbal refused to comment on PPP’s reservation on the award of low development budget.

The government plans to maintain fiscal discipline and create a primary budget surplus double than this financial year as part of its understanding with the IMF to lower debt burden.

Prime Minister Shehbaz Sharif formed a committee under the Presidency of Vice Prime Minister Ishaq Dar to build a consensus between PPP and PML-N on the next budget. The budget will be presented in the National Assembly before Eid holidays.

Pensions can be increased by 7%, and wages at this time are proposed to be raised only 6%aimed at meeting the IMF demand to keep the employees-related expenses frozen at this year’s level in terms of the size of the economy.

However, both proposed increases can increase from 6% and 7% levels, the sources said. Average inflation is expected to remain around 5%and the government has linked the increase in wages with inflation.

Some members of the PPP delegation also called the next financial year’s proposed RS14.3 trillion tax target unrealistic due to a slower economy, being confronted by companies and negative growth in production on a large scale, the sources said.

PPP also asked the government to prioritize sectors that need to be protected and promoted to gain economic growth. The government advised not to take any negative measures that could damage the agricultural sector, the sources said.

PPP also sought tax relief for the grade that was adversely affected by the heavy taxation in the last budget.

The sources told The Express Pakinomist that the government can impose income tax on advanced retirees, but are considering giving some relief to the marginalized wage cases by increasing their tax exemption limit and also lowering rates against different plates.

There are proposals to introduce income tax for pensioners and at the same time reduce the rates of the grade that is subject to the approval of the IMF later this month, according to a top official in the Federal Board of Revenue.

According to these discussions, the current tax -free monthly salary limit can be improved from RS50,000 to slightly above RS83,000. Due to progressiveness in the plates, its benefit will also be available to the people who earn higher income. The discussions also take place to reduce 2.5% income tax rate against all existing record rates. This will effectively reduce the total effective income tax rate by 3%, the officials said.

Income levels against each plate speed are also recommended to increase to reduce the burden, the sources said.

That grade had been hit hardest in the last budget of the government of Prime Minister Shehbaz Sharif. The government has beaten a 35% tax on the monthly income of above RS333,000, which can be reduced by 2.5% in addition to increasing the tax -free threshold.

The 5% tax rate on a monthly income of RS100,000 had been imposed, which could also be downward. On a monthly income of RS183,000, the government had beaten 15% income tax, which could be reduced to 12.5%.

On the monthly income of over RS267,000, the government charges 25% income tax, which can be reduced to 22.5%. There is also a recommendation to introduce a new record at 20% rate, but this may not pass through the IMF study, which is not beneficial to having more than four plates.

On the monthly income of up to RS33,000, the tax rate is 30%, which can be lowered to 27.5%.

The government should provide relief to that grade and go for the traders, PML-N senator Anusha Rehman said on Monday.

According to the Express Pakinomist report, the grade RS391 billion paid income tax in just nine months, which equals 10% of the total income tax paid by the entire Pakistan. The traders paid only RS26 billion, only 0.6% of the total collection of income tax.

The top FBR official said the pension was an income source to be taxed. The proposal to tax pensions had also been floated last year, but subsequently it was shrunk. The consideration is that compared to normal wage income, the tax level for pensions should be at least four times less.

In contrast to the current monthly tax -free income level of RS50,000, the authorities want to tax pensions of over RS200,000 per year. Month. If approved, this would only hit the high-end pensioners, mostly retired judges, three-star generals and retired class 21-22 bureaucrats.

For the next financial year, the government plans to set a tax target of RS14.3 trillion. This is RS2 trillion or 16% higher than this year’s downward target. The government expects RS1.5 trillion or 12% further collection to come due to the nominal increase in the size of the economy.

However, the IMF FBR asks to complete proposals to collect the additional 4% or over RS500 billion taxes, according to the sources.

The sources said that FBR’s enforcement has been strengthened, as evidenced by 26% annual growth in collection despite 7% nominal economic growth. They thought the government did not need any measure, but the fund asked to take measures.

Meanwhile, the Senate Standing Committee for Funding Monday heard the budget -related requirements of different companies.

The poultry association revealed that FBR charged RS5,190 Tax on a parent chicken, which was abnormally high. FBR chairman Rashid Langrial assured himself to review the question before the budget.

Pakistan Dairy Association has again demanded to reduce VAT on packaged milk to 5% from the world’s highest rate of 18%, as the tax introduced last year has negatively affected sales. Rashid Langrial told the committee that three proposals were discussed to reduce the rate to 5%, 10%or 15%, but no decision has been made.

FBR (Member) Tax Policy Dr. Najeeb Memon said the reduction in the turnover tax rate to 5% would succumb the RS20 billion revenue to the RS30 billion. The association was of the opinion that FBR with the sale already did not achieve the desired results.

The presenter of Fruit Juices Council Atika Mir recommended to lower the federal excise rates to 15% from current 20%, as the heavy taxation has cumulatively reduced corporate sales by 45% in the last two years. She said that higher taxation also affected farmers due to a 66% reduction in demand for mangoes to produce juice.

The government, which is facing a huge deficit, took an extraordinary measure on Saturday and promoted a presidential regulation to immediately recover taxes from bank accounts for taxpayers after decisions from High Courts and Supreme Court of Pakistan.

Prime Minister Shehbaz Sharif on Monday, the Ministry of Information to inform the public, directed the true perspective of bringing the regulation.