Pakistan's Federal Budget 2024-25 Faces Political Uncertainties

The federal budget presentation for the fiscal year 2024-25 in Pakistan is encountering delays due to political uncertainties surrounding reserved seats and the absence of key finance-related committees in the Senate and National Assembly. The budget strategy paper (BSP) for the upcoming fiscal year has not yet been shared with parliament. Originally scheduled for June 10, the budget presentation is now expected to take place on June 12, following the Pakistan Economic Survey 2023-24 on June 11.

The approval of the federal budget 2024-25 by the Senate is projected to occur by June 26. In response to demands from the International Monetary Fund (IMF), the Pakistani government is considering eliminating tax exemptions in the upcoming budget. Proposed changes include phasing out exemptions on sales and income tax. Furthermore, there is a contemplation to impose sales tax on tractors and pesticides, potentially leading to increased prices for these agricultural essentials.

Currently, pesticides and their active ingredients registered by the Department of Plant Protection are exempt from sales tax under the Sixth Schedule of the Sales Tax Act. However, this exemption may undergo revision in the budget for the fiscal year 2024-25.

The delay in the federal budget presentation, coupled with the proposed changes in tax exemptions and the potential imposition of sales tax on agricultural inputs, highlights the evolving economic landscape in Pakistan. As the government navigates these challenges, it is essential for stakeholders to stay informed about the upcoming budget decisions and their implications on various sectors of the economy.