3 Key Takeaways from the Budget 2023-24-Beneficiary Sectors

The Budget 2023-24 presented by the Finance Minister of Pakistan outlines key initiatives to address economic challenges while fostering growth in vital sectors. Unlike, the previous budgets there is no substantial relief as inflation whips daily.

However,  there are 3 Key takeaways from the Fiscal Year Budget 2023-24 taken to support the IT industry, promote youth entrepreneurship, and encourage the adoption of green mobility solutions.

Tax Concessions on Hybrid Electric Vehicles

The government has retained the tax concessions in the Finance Bill 2023-24. However, standard car manufacturers have expressed concerns about these concessions primarily benefiting the wealthy, as the cost of HEVs is high.

Sales Tax and Customs Duty

The sales tax rates on 1,800cc and above HEVs remain unchanged in the 2023-24 budget. Similarly, the customs duty rates on specific parts of HEVs have not been altered. This lack of change in tax rates may affect the HEV market and consumer affordability.

Revoked Fixed Import Duty on Used Cars

The government has canceled the fixed import duty on used cars above 1,300cc. Instead, ad-valorem import duty will be applied, potentially leading to under-invoicing and an increase in used car imports.

Supporting IT and IT Enabled Services

Recognizing the IT sector's potential, the government has introduced several measures to facilitate its growth:

• Concessional income tax rate of 0.25% until June 2026 for IT exports.
• Exemption from sales tax registration and simplified tax return for freelancers with export volume up to $24,000 per year.
• Import of software and hardware up to 1% of exports without tax, capped at $50,000 per year.
• IT sector granted SME status, benefiting from concessional income tax rates.
• Establishment of an Rs. 5 billion Venture Capital Fund to provide business capital.
• Reduction of sales tax rate on IT services from 15% to 5% in the ICT sector.
• 50,000 IT graduates to receive professional training in the next fiscal year.

Youth Entrepreneurship

The budget encourages young entrepreneurs by offering the following incentives:

• 50% tax rate reduction for businesses started by individuals or AOPs below the age of thirty for three years.
• Prime Minister's Youth Program provides loans at discounted rates for starting businesses.
• Allocation of Rs. 5 billion for specialized training under the Prime Minister Youth Skills Programme.

Conclusion

The Budget 2023-24 reflects the government's commitment to driving economic growth through IT development, youth entrepreneurship, and green mobility in Pakistan. These measures aim to enhance the IT industry's competitiveness, empower young entrepreneurs, and encourage the adoption of environmentally friendly transportation options. With strategic investments and incentives, Pakistan is poised for a digital and sustainable future.