LAHORE: Amid massive in-house protests by the opposition, the Punjab government led by PML-N presented its annual budget of Rs5.45 trillion for the fiscal year 2024-25, though the Rs630 billion surplus budget reveals no plans to tax the agriculture and real estate sectors properly, despite ongoing pressure from the IMF.
Currently, income from agriculture is being taxed by the province at a far lower rate than the normal personal income tax rates, hence the demand for taxing agriculture income on a par with other incomes to end this discrepancy by the IMF.
The provincial government collects one per cent stamp duty and 1pc corporation/TMA fees on the total DC value rate of the property during transfers. There are no changes to the existing stamp and corporation fees, nor increases in current agricultural taxes (Abiana, etc.), potentially making it difficult to meet or exceed revenue targets.
Punjab Finance Minister Mujtaba Shujaur Rehman, delivering the budget speech in the Punjab Assembly, emphasised that the budget includes an Annual Development Programme (ADP) of Rs842bn, a 28pc increase from the previous year’s Rs655bn. Significant allocations have been made for education, health, and agriculture, introducing schemes like the laptop and Kissan card initiatives.
Mr Rehman said the surplus budget was aimed at executing the roadmap set by Chief Minister Maryam Nawaz in her first 100 days of the government. “Today, we have begun the development of the province. Today, we are presenting Punjab’s biggest ever tax-free and surplus budget,” he maintained. Documents show that the budget has a surplus of Rs630bn.
The budget also proposes the distribution of solar panels free of cost to all those consuming up to 100 electricity units monthly.
Various provincial fees and taxes have been rationalised. The court fees have been increased through amendments to the Court Fees Act of 1870. For example, a fee of Re1 has been raised to Rs100 and that of Rs5 to Rs500. The Stamp Duty Act of 1899 has also been amended, increasing the valuation of Rs100 stamp papers to Rs1,000, and Rs1,200 to Rs3,000.
Immovable property tax
Amendments to the Punjab Urban Immovable Property Tax Act of 1958 introduce a self-assessment mechanism and it has been proposed that property tax on properties in the cities will now be collected according to the capital value (DC rate) instead of the rental table.
The government will have the authority to declare any property as a high-value property. The property owners will be informed about the specific procedure for assessing the value so that they can self-assess their property. However, the assessing authority will be able to audit the self-assessment of the property and if a person underpays tax or tries to evade tax, they may be fined in addition to the amount of tax evaded.
If a person does not self-assess his property, the authority will give him a two-week grace period. For capital value tax collection, it has been proposed that residential property worth Rs5 million will be exempted from tax while on the commercial property of the same value, tax will be collected at the rate of 0.07pc; the residential and commercial property above Rs5m and up to Rs10m will be taxed at the rate of 0.07pc; residential and commercial property valuing above Rs10m and up to Rs25m will be taxed at 0.08pc; and for property worth above Rs25m, the tax rate will be 0.09pc.
Like the federal budget, the provincial government has amended the motor vehicle registration regime from engine capacity to the vehicle’s total value to enhance fee collection.
Finance Minister Rehman emphasised the focus on uplifting businesses and providing public relief. He noted the budget’s 100pc cash-covered ADP and efforts to reduce government size and expenditures while increasing revenues without burdening the poor.
The budget anticipates earning over Rs4.643 trillion in revenue, with expenditures amounting to Rs4.816 trillion. The government will receive Rs3.683 trillion from the federal divisible pool under the NFC award. The projected provincial revenue collection is Rs960bn, 54pc higher than the current year.
The Rs960bn revenue collection target includes Rs300bn from the Punjab Revenue Authority (PRA), Rs105bn from the Board of Revenue (agriculture tax, etc), Rs57bn from Excise and Taxation, and Rs488bn from non-tax revenue.
Salaries, pensions
Like the federal government, the Punjab government has proposed 25pc increase in the salary of government employees (grades 1 to 16), 20pc salary raise for the officers (grades 17 to 22) and 15pc increase in pensions. The minimum wage has also been increased from Rs32,000 to Rs37,000.
A sum of Rs603bn has been allocated for payment of salaries, followed by Rs451.4bn for pensions and Rs857bn for the local governments.
Health, education
The government has increased the education budget by 13pc to Rs669.74bn, including Rs604.3bn for non-development expenses and Rs65.5bn for development-related expenditures. The school education has been given Rs42.5bn to spend on repairing/restoring school buildings, adding new classrooms, IT labs, afternoon schools, etc., during FY2024-25.
A sum of Rs2.5bn has been allocated for modern education for unprivileged students, Rs100 million for endowment fund, Rs17bn for higher education (scholarships, laptops, university in Murree and facilities in colleges), Rs2bn for special education and Rs4bn for non-formal education.
The government has allocated Rs539.15bn for the health sector, including Rs410.55bn for non-development and Rs128.60bn for development expenses. The primary and secondary healthcare departments will receive Rs42.6bn, whereas Rs55.4 billion has been allocated for upgrading OPDs in hospitals and providing medicines to patients.
Around Rs86bn has been kept for the specialised healthcare department. The budgetary allocations also include Rs143bn for road rehabilitation across Punjab, Rs6.4bn for fisheries and wildlife and Rs1.4bn for women development.
