ISLAMABAD - Finance Minister Senator Ishaq Dar is going to present the budget for financial year 2013-14 during a special session of the National Assembly today.

The Pakistan Muslim League Nawaz (PML-N) led government will unveil its first budget with estimated outlay of around Rs3.4 trillion with a deficit of Rs 1.62 trillion. The federal cabinet would approve the budget after reviewing the proposals. The Finance Ministry has proposed to enhance the salary by 10 to 15 percent and pensions by 20 percent.

The estimated budget outlay could be around Rs 3.4 trillion. The budget deficit has been estimated at Rs1,620 billion (5.8 percent of the GDP) with provincial surplus of Rs70 billion for the next fiscal year. The GDP growth is projected at 4.4 percent for 2013-14.

The new government has envisaged a tax collection target of Rs2,475 billion for the year and is likely to introduce taxes worth Rs150 billion in the budget that would hit the lower and middle class. The government is likely to take taxation measures including 10 percent federal excise duty (FED) on the import/local manufacturing of cars above 1800cc, to increase sales tax on sugar from 8 percent to 16 percent, 16 percent FED on all financial services, 16 percent sales tax on domestic sales tax zero-rated items, additional FED on ghee/cooking oil industry and 5 percent additional sales tax on supply of electricity/gas to un-registered industrial and commercial consumers. The government could impose 10 percent withholding tax on domestic consumers using more than 1000 units of electricity and increase tax on cash withdrawal from banks by 0.3 percent.

The National Economic Council already approved the developmental budget of Rs1155 billion for the year 2013-2014 wherein Rs540 billion have been allocated for federal PSDP and provincial annual development plans (ADPs) for next year have been estimated at Rs615 billion. The government will earmark Rs627 billion for defence showing with an increase of 10 percent. The government would allocate Rs1.149 trillion for the interest payment against Rs1.028 trillion earmarked for the current fiscal year. Rs155 billion would be allocated for pensioners against Rs141 billion allocated in 2012-13.

The centre will keep Rs278 billion for the federal government service delivery as compared to Rs262 billion of the last year. Rs364 billion would be released for subsidies against Rs237 billion earmarked in 2012-13. The government will slash grant to provinces to Rs54 billion in next year from Rs57 billion earmarked in the last budget.  Other grants will be increased to Rs393 billion from Rs383 billion of 2012-13.

The estimated total revenue (tax and non-tax) in 2013-14 will be Rs2.833 trillion. The projected amount for non-tax revenue is Rs689 billion. Gross revenue will be Rs3.522 trillion. The government will transfer Rs1.628 trillion to provinces under the NFC Award after which net revenue available to the federal government is estimated to be Rs1.894 trillion.

The government has planned to increase taxes to 10 percent of the GDP from revised 9.4 percent of the GDP in the last budget.