Rs2.24tr Punjab tax-free budget: Tax reduced on over 20 services

LAHORE: Punjab Finance Minister Hashim Jawan Bakht presented an austerity-based 2020-21 tax-free budget of Rs2.24 trillion in the provincial assembly, with the running expenditure increasing by nominal 1.5% and a development outlay of Rs337 billion.

The finance bill also estimated Rs133 billion from the donor agencies during the fiscal year 2020-21.

Following in the footsteps of the federal government, the Punjab provincial government also decided not to give any salary raise to the government employees or any increase in pension. Four per cent tax was imposed on online taxi services. However, tax from 11% to 16% was reduced on more than 20 services. Also, the entertainment tax was abolished on cinema houses.

The finance bill said, “The rates have been reduced for the sectors hit by corona pandemic such as hotels, caterers, marriage halls, etc.” However, the bill proposed imposition of Rs50 per square foot and Rs100 per square foot tax on property builders and property developers, respectively.

The minister also announced tax relief for different sectors. The sectors that got relief in provincial sales tax include health insurance, doctors’ consultation fee and hospital room charges. Property owners have been facilitated to pay the property tax in two instalments. Hotels, restaurants, marriage halls, beauty salons and many others have been provided tax relief. The business licence fee has also been abolished to encourage new entrepreneurs. Sales Tax rates have been reduced for small hotels, guest houses, marriage halls, lawns, caterers, IT services, tour operators, gyms, rent a car, property dealers and others. Entertainment tax has been reduced.

The budget was prepared taking into account the coronavirus devastation in Punjab. Measures have been announced to reduce recurring expenditure without compromising the economic stability and growth in the province.

Higher allocations were made for social protection and relief to the needy. Resources have been earmarked for human capital development. Agriculture development and food security measures were given special attention and the public-private partnership (PPP) was introduced on identified and commercial viable public sector programmes. The PPP projects would be free of sales tax on services for five years.

The Punjab government managed to save Rs19 billion through pension fund reforms and Rs10 billion saving in service delivery expenditure. The budget of local governments, however, has been increased by Rs10 billion. The Punjab government rejected supplementary grants worth Rs61 billion in the current year. The budget includes Rs106b for coronavirus relief, out of which Rs50b has been allocated for direct expenditure while Rs56b tax relief has been accorded to businesses. One additional salary for health workers has also been approved.

Mark-up subsidy and guarantee credit scheme is being introduced for micro, small and medium enterprises (MSME). The government allocated Rs8 billion for MSME in the budget. To facilitate the MSME sector, the Punjab government is completing and upgrading the industrial estates in Lahore, Faisalabad, and establishing the Bahawalpur industrial estate. The Punjab finance minister said the measures would create jobs and accelerate economic growth in the province.

The Punjab government allocated Rs6.87 billion for skill development for Technical Education & Vocational Training Authority (Tevta). It includes Rs1.50 billion for Hunarmand Naujawan Programme under which skill development under e-learning mode would be started. Tevta programme is being revamped to introduce a curriculum that is in line with the current needs of the industries.

For the poor, Rs4 billion have been allocated to Punjab Social Security Authority. It will be linked to Punjab Ehsaas Programme. This amount would be spent to mitigate the miseries of transgender, women victims of acid attack and the elderly population.

The south Punjab poverty alleviation programme has been allocated Rs2 billion to look after the poor in 10 districts in Punjab. These include Bahawalnagar, Bahawalpur, Dera Ghazi Khan, Muzaffargarh, Layyah, Rajanpur, Rahim Yar Khan and Jhang. In the same way, Rs1.5 billion has been earmarked for 9 Punjab districts to start women income generation and self-reliance programme. The Punjab Human Development Programme would receive Rs536 billion to bring the poor out of poverty. For south Punjab secretariat, Rs1.6 billion have been allocated.

The health sector was allocated Rs284.20 billion, out which Rs250.70 billion were for recurring expenses, while Rs33 billion reserved for development works. He said in order to control Covid-19, the government earmarked Rs13 billion, while the medicine procurement target has been increased to Rs26 billion from Rs23 billion this fiscal. For specialised healthcare, the government allocated Rs6 billion, which would be utilised to provide missing facilities in various district headquarters hospitals.

To augment the shortage of health services human resources that include doctors, nurses and other paramedical staff, the Punjab government has recruited 12,000 professionals that the minister hopes would be adequate to handle the current health affairs. For the Health Insaf Cards, the government has allocated Rs12 billion. This scheme is currently benefiting five million families. The budget for Punjab Primary Healthcare has been enhanced to Rs11.46 billion.

For the education sector, the Punjab government earmarked Rs391 billion, out of which Rs357 related to recurring expenses and the rest was for development works. The allocation for the School Education Department is Rs350.10 billion. Out of this, 27.60 billion is part of the development programme. For school councils, Rs13.50 billion has been earmarked while Daanish schools will get Rs3 billion. An amount of Rs22 billion has been reserved for schools being operated under the public-private partnership.

For higher education, the Punjab government would provide Rs37.56 billion to the Higher Education Department, out of which Rs3.9 billion are for development projects. It includes the establishment of seven universities in different districts of Punjab.

The finance minister conceded that locust threat is very grave for agriculture and the federal government is mainly looking after measures to eradicate the menace. However, the Punjab government intends to earmark Rs4 billion to tackle locust, out which Rs1 billion would be given to the Provincial Disaster Management Authority (PDMA). The cumulative agriculture budget for Punjab is Rs31.73 billion. For food security and wheat procurement, Rs331 billion has been earmarked for the next fiscal. For livestock and dairy development, Rs13.3 billion has been allocated. The Forest Department would get Rs8.73 billion and the Irrigation Department would be given Rs37.41 billion.