budget of the financial year
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In the regular budget of the financial year 2025-24, the federal government increased by 38 percent.

A budget is more than just a summary of the federal government’s projected receipts and outflows for the forthcoming fiscal year, including data on capital, revenue, and external receipts.

However, it also serves as a predictor of a nation’s economy, growth, and future. The growth rate for FY 2023–2024 is a pitiful 3%, the lowest in 77 years since independence.

One of the largest fiscal deficits, or between 6% and 7% of GDP, occurred in FY 2023–2024 between income and spending. Therefore, the Federal Budget for FY 2024–2025, which is expected to be proposed in the coming days, should concentrate on (a) generating income and reducing expenditures in order to lower budget deficits. This can be achieved by implementing sound fiscal policies, such as expanding the tax base without enacting new taxes or raising the rates of existing taxes, as well as enhancing the tax to GDP ratio.

With respect to nations such as China, Egypt, India, and Malaysia, Pakistan’s tax-to-GDP ratio is comparatively low. (c) to increase growth in significant economic sectors, more money will be invested in manufacturing, agriculture, and social sector development—that is, education, health, skill development, and the information technology (IT) sector—through increased production. (b) the incidence of direct tax will be increased while that of indirect tax will be decreased. The reduction in indirect tax rates will stimulate savings, which will in turn stimulate investment and higher economic activity.

It is advised to direct a significant amount of FBR resources (IT, labor, intelligence, and data collection) on expanding the tax base if the tax-to-GDP ratio is raised to at least 15% of GDP.

All industries, including real estate, wholesale and retail commerce, and agriculture, should pay to the national coffers in line with their share of the GDP.

The lowest tax rates are seen in Pakistan’s retail and wholesale industries. High taxes and tax evasion are characteristics of this industry. As to a recent analysis by Planet Retail, the retail industry in Pakistan has exceeded the $152 billion barrier, making it the second largest employer and the third greatest contributor to the country’s GDP.

The Federal Board of Revenue (FBR) estimates that the retail sector contributes an astounding 18% of the GDP. Its modest 3.9% contribution to the national exchequer is the result of this.

It has long been known that monitoring purchases and sales at these stores and digitizing transactions were the only ways to include these businesses in the tax system. The most recent proposal said that each transaction’s specifics would be sent straight to the board through the FBR’s new point of sale system, enabling them to compute and assess taxes appropriately.

In addition, the total tax on builders for a 3000 square foot commercial structure is Rs. 240000, or Rs. 80 per square foot.

Governments should follow certain rules in order to build a budget that is both sustainable and effective. The budget-making process should involve stakeholders such as citizens, businesses, and civil society organizations. Decisions about the budget should be based on factual data and evidence. Finally, budget decisions should be transparent and communicated to the public. These are some examples of how to define priorities and allocate resources accordingly.

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