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Pakistan's Finance Minister Ishaq Dar leaves after a post-budget press briefing for the 2023/24, in Islamabad. Image Credit: REUTERS

Islamabad: The Pakistani government has unveiled its federal budget for the fiscal year 2023-24, featuring incentives for the agriculture and IT sector, salary increases for government employees, exemptions on solar panels, and other subsidies.

Pakistan’s Finance Minister Ishaq Dar announced the Rs14.5 trillion (around $50.5 billion) budget in the National Assembly on Friday, with over half of the funds allocated to service Rs7.3 trillion of debt.

The government has set aside around Rs1 trillion for subsidies in the electricity and gas sectors. The target for tax collection is set at Rs9.2 trillion ($32 billion) and envisions a 3.5 percent GDP growth. However, experts and opposition have expressed concerns about inflationary pressure, unrealistic revenue targets, and the expansion of the fiscal deficit.

Budget outlay
• Tota federal budget: Rs 14.46 trillion
• Interest payments: Rs7.3 trillion
• PSDP (health, education, infrastructure): Rs1.15 trillion
• Defence: 1.8 trillion
• Subsidies (energy, gas and etc): Rs 1.074 trillion
• Pensions: 0.76 trillion

Highlights of the budget:

Incentives for overseas Pakistanis

The government has made changes regarding remittances from overseas Pakistanis. Foreign remittances up to the equivalent of $100,000, no longer require the source of income or assets to be explained.

Furthermore, a ‘diamond card’ will be introduced for individuals sending over $50,000 in remittances.

The card offers several benefits, including preferential access to Pakistani embassies and consulates, fast-track immigration at airports, and special prizes through draws.


To boost production, the agriculture credit for the fiscal year is being increased from Rs 1.8 trillion to Rs2.25 trillion. The budget also includes various measures such as Rs30 billion to switch 50,000 tube wells to solar energy, tax exemptions on the import of quality seeds and saplings, allocation of Rs5 billion funds for the agro-industry, and a five-year tax exemption for agro-based industrial units with an annual turnover of Rs 800 million.

IT sector

Incentives for the IT exporters include the continuation of a 0.25 per cent concessional rate of income tax until June 30, 2026, and the duty-free import of IT-related equipment equivalent to 1 per cent value of their export proceeds. Additionally, freelancers earning up to $24,000 per year will be exempted from sales tax registration and allowed to file a simplified single-page income tax return. The government is establishing a venture capital fund with Rs 5 billion to support IT entrepreneurs. Sales tax rates are being reduced rate from 15 per cent to 5 per cent on IT services. Professional training will be provided to 50,000 IT graduates.

Solar energy

To promote renewable energy, the government has exempted customs duty on the import of solar panel components, including inverters, solar panels, and batteries. This exemption aims to reduce the cost of adopting solar energy for consumers.


The federal government has reserved Rs65 billion for the current expenditures and Rs70 billion for the development expenditures of the Higher Education Commission (HEC). The budget has set aside Rs10 billion for the distribution of 100,000 laptops to deserving students. It includes the establishment of the Pakistan Endowment Fund worth Rs5 billion for merit scholarships.

Salary Increase for govt employees

Salaries of government employees between grades 1 to 16 will increase by 35 per cent and those in grades 17 and above will see a 30 per cent increase to help cope with inflation. The minimum monthly wage within the Islamabad Capital Territory (ICT) will be raised to Rs32,000 and the minimum pension will be Rs12,000.

Social safety

The budget increases the allocation for the Benazir Income Support Programme (BISP) by 25 per cent to Rs450 billion. Assistance will be provided to 9.3 million families, and scholarships will be awarded to 92,000 students under the social safety net programmes. The number of beneficiaries for the nutrition initiative has also been increased.


A defence budget of Rs1.8 trillion ($6 billion) was annnounced, representing a 13 per cent increase over the military expenditure in the previous year. The army will receive the largest share of the budget (Rs824 billion), followed by the Pakistan Air Force (Rs368 billion) and Pakistan Navy (Rs188 billion).

Super tax slabs

The budget introduces super tax slabs for the tax year 2023. The rates are 0 per cent for income below Rs150 million, 1 per cent for income between Rs150-200 million, 2 per cent for income between Rs201-250 million, 3 per cent for income between Rs251-300 million, 4 per cent for income between Rs301-350 million, 6 per cent for income between Rs351-400 million, 8 per cent for income between Rs401-500 million and 10 per cent for income exceeding Rs500 million.

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Image Credit: Reuters

Initiatives for youth and women

The budget includes populist schemes aimed at the youth, such as the laptop scheme, tax relief for freelancers, cuts in income taxes for youth enterprises, loans, and skill development programmes. Furthermore, the government has allocated Rs10 billion under the PM’s Youth Loan Programme to provide concessional loans for small businesses. The budget allocates Rs5 billion for women empowerment initiatives, including skill development, easy loans for businesses, and training programmes. Additionally, tax concessions will be granted to women entrepreneurs.

Healthcare allocations

The healthcare sector will receive a proposed allocation of Rs24.21 billion, with Rs13 billion dedicated to uplifting the sector under the public sector development budget. Some of the healthcare initiatives include the establishment of the Centre of Biologics and Cancer Research, elimination of Hepatitis C Infection, and PM’s National Programme for Prevention of Diabetes. However, the Pakistan Medical Association (PMA) has highlighted the deteriorating health indicator and emphasised the need to enhance the health budget to 6% of the GDP, in line with the WHO’s recommendations, as the current allocation stands at less than 1 per cent of the budget.

Public sector development programme (PSDP)

The budget includes a record-high federal PSDP of Rs950 billion, with an additional Rs200 billion for public-private partnership projects taking the total to Rs1.15 trillion. The PSDP focuses on infrastructure projects, such as energy, railways, motorways and highways, aviation, water reservoirs, and ports. It also introduces new initiatives, including youth programs and IT startups, education funds, and health programmes.


Several other tax-related measures include an increase in withholding tax on cash withdrawals for non-filers and an enhanced sales tax rate for point-of-sale retailers dealing in leather and textile products. The budget also offers tax relief to industrial and export sectors and removes regulatory duty on second-hand clothing. It also includes an increase in the Goods and Services Tax (GST) ratio for tier-one retailers in the leather and textile industries, specifically targeting expensive branded goods.

Revenue targets

The Federal Board of Revenue (FBR) has set a tax revenue target of Rs9.2 trillion, representing a 28 per cent increase compared to the expected collection for the current year. The new direct tax target, projected at Rs3.7 trillion, relies heavily on income tax. Indirect taxes are estimated at Rs5.44 trillion, with sales tax accounting for the major chunk. A non-tax revenue target of Rs869 billion has been set under the petroleum levy.

Total FBR Taxes: Rs9.2 trillion
Direct Taxes: Rs3.7 trillion (mostly from income tax)
Indirect Taxes: Rs5.4 trillion (major chunk from sales tax)
Non-tax collection target: Rs2.96 trillion
Levis and Fees: Rs29.4 billion
Income from property and enterprise: Rs398 billion
Petroleum Levy: Rs869 billion

What experts have to say 

Experts believe that achieving these targets without serious taxation measures on sectors like real estate, agriculture, retail and wholesale trading, will be challenging.

Financial experts and opposition figures have raised concerns about the budget’s impact on inflation and the expansion of the fiscal deficit. They consider the tax and non-tax revenue targets to be unrealistic. Critics argue that the budget lacks structural reforms and control over fiscal expenditures while burdening compliant formal sectors and not adequately taxing other sectors. Despite mixed reactions, the budget includes positive measures such as a focus on agriculture, promotion of IT and IT-enabled exports, and a reduction in minimum tax for listed companies.