In this article, we will tell our readers all they need to know about the Budget 2020-21. The budget for the fiscal year 2020-21 was presented by the Minister for Industries Hammad Azhar on the National Assembly floor on Friday.
Azhar said that as the economy has suffered amidst the coronavirus pandemic, thus the government will launch an “expansionary fiscal policy”.
The meaning of expansionary fiscal policy is that the government is making use of the economic tools to increase spending by individuals and businesses. This is done in various ways like reducing the taxes so that there is more disposable income at hand for households and businesses.
Since the outbreak of coronavirus, the minister said that the government has reduced interest rates to 8% from 13.25% in just three months.
Coming to budget 2020-21, the raw materials of chemicals, leathers, textile, rubble, and fertilizer industries have been exempted from customs duty. It will make them duty free, fully. The exemption will be applicable to almost 20,000 items used as raw materials in the abovementioned industries. This makes 20% of all the imports.
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For retailers, the government has proposed reducing the sales tax to 12% from 14%. Also, as the restaurant industry has suffered a lot amidst the pandemic, the government has given the proposal to reduce the minimum tax for the industry to 0.5% from 1.5% for the six months i.e. from April to September 2020.
Mobile phones that are locally manufactured are expected to get cheaper after sales tax reduction is applied.
Coming to cigarettes, the government has proposed that on imported cigarettes, e-cigarettes, cigars, and vaping liquid, federal excise duty (FED) will be increased from 65% to 100%.
It is proposed that special food supplements for children with genetic birth problems are exempted from all the duties and import taxes.
Also, the government has proposed to exempt all duties and taxes on diagnostic kits for coronavirus and cancer.