Finance Minister Aurangzeb Unveils IMF-Aligned Budget Changes

Prime Minister Shehbaz Sharif has confirmed that the upcoming federal budget for 2024-25 was developed in partnership with the International Monetary Fund (IMF). Finance Minister Muhammad Aurangzeb has introduced significant changes to the proposed finance bill, including zero rating on local sales of export industries and stationery items. The adjustments also involve a reduction of Rs250 billion in allocations for the Public Sector Development Programme (PSDP) and continued reduced rates for hybrid electric vehicles.

The government is considering stricter measures for retailers and distributors outside the tax net, while maintaining unchanged tax rates for individuals who have filed timely returns in the last three years. The budget, formulated in consultation with the IMF, aims to tackle economic challenges through structural reforms such as increasing the tax-to-GDP ratio, state-owned enterprise reforms, privatisation, and energy sector reforms.

Finance Minister Aurangzeb stressed the importance of a 'national financial pact' that includes provincial contributions to national expenses, reduced provincial spending, and enhanced provincial resource mobilisation for financial stability. The government is dedicated to implementing these reforms and providing regular progress reports to stakeholders.

Key changes in the budget include exemptions for stationery items from sales tax, continuation of reduced sales tax rates for hybrid electric vehicles, and zero rating on local supplies of the export sector under the Export Facilitation Scheme 2021. The government also announced measures to facilitate non-filers of income tax before taking punitive actions and adjustments to fines for late filers and non-filers.

The amendments in the budget reflect the government's commitment to addressing economic challenges and promoting sustainable financial solutions in collaboration with international financial institutions like the IMF.