Salient Features of Federal Budget 2021-22

Salient Features of Federal Budget 2021-22.

Budget 2021-22

The federal government of Pakistan Tehreek-e-Insaf (PTI) has presented the country’s deficit budget 2021-22 of Rs 8400 billion in the National Assembly. This is the third federal budget presented by the PTI government. The federal budget has been described by the government as a budget for economic growth.

In the budget 2021-22 presented by the government, more than Rs 900 billion has been earmarked for the annual development program, along with various incentives and tax exemptions for the development of the agriculture, industry and services sectors.

In the federal budget 2021-22 presented by the government, while various incentives and taxes have been imposed on them for different sectors, on the other hand, what has been done in the budget for a common man through which he can benefit. How will the steps taken by the government to reduce / increase taxes and economic growth affect the life of a common man?

Federal Budget 2021-22

The federal government has announced an increase in the salaries of government employees which will be given to them in the form of 10% ad hoc relief. The budget also announced a 10 percent increase in pensions for retired employees. The government did not increase the salaries and pensions of government employees last year due to the Corona virus crisis and the resulting negative trend in the economy. The announcement by the federal government to increase the salaries and pensions of government employees will provide relief to the employees due to the high rate of inflation in the country.

Inflation has been recorded at more than 10 per cent till May in the current financial year, mainly due to increase in electricity and gas prices along with food items. However, the federal government has increased salaries and pensions, while inflation has remained high for two years. The minimum wage in the federal budget has also been increased to Rs 20,000 from Rs 17,500 earlier.

How will tax breaks benefit the common man in budget 2021-22?

The federal government has given tax breaks to various manufacturing sectors in the budget. The move is aimed at boosting the country’s economic output by providing incentives to the country’s manufacturing sector, which is targeted at 4.8 percent in the next financial year. Tax breaks will boost activity in the manufacturing sector while boosting the economy, but it will also help create new jobs in the country.


At the same time, the government has reduced tax rates on consumer goods, including sales tax, federal excise duty and customs duty.

The federal budget 2021-22 has also reduced the sales tax rate on 850 cc vehicles and reduced the rates of ‘value added tax’ and ‘federal excise duty’. Dr. Alia Khan says that this initiative will reduce the prices of small vehicles which is a welcome development for the common man so that he can come from motorbike to small vehicle. Similarly, tax breaks on telecom services will also make telecom connectivity easier for the common man. He said that incentives for small scale industries and reduction in taxes would also provide relief to the common man.

It is s a positive step for the development of the agricultural sector which will help in the development of the sector and the improvement of the condition of the common farmer.

Similarly, an interest-free loan of up to Rs. 500,000 for an urban household for business and an interest-free loan of up to Rs.

What effect can the increase in tax targets have on the common man?

The government has set a target of collecting 23% more taxes in the next financial year than in the current year. This target has been set at Rs. 5800 billion in the next financial year.

In Pakistan, historically, the balance between direct and indirect taxes in the country’s gross tax revenue has deteriorated drastically. The bulk of the country’s total revenue comes from direct taxes, which are collected in the treasury in the form of sales tax, customs duty, federal excise duty and petroleum development levy.

The tax-to-GDP ratio in the country is at an all-time low due to the low revenue collection in the form of direct taxes. In order to achieve the big tax target in the next financial year, the government will be able to do so by increasing taxes like sales tax, customs duty, the cost of which will have to be paid by the average consumer in case of buying things at exorbitant prices.

In precise of  salient features of Federal Budget 2021-22,  the government would have to take more steps to get more taxes, but it would have to adopt a mechanism so that the common man would not be affected. He said that it is usually the case that when the tax rate is increased, more tax is collected, then the capitalist or industrialist collects this tax from the consumer by increasing the prices.

There are still many informal sectors in the economy that are not in the tax net and perhaps the government wants to increase their taxes by bringing them into the tax net because no new tax has been introduced in this budget through which more Taxes can be collected.


How will the increase in subsidies be beneficial for the common man?

In the federal budget, the subsidy has been estimated at Rs. 682 billion so that the price of various items can be compensated and brought to the purchasing power of a common man. These include subsidies on electricity bills as well as food subsidies.

How will the increase in the annual development program benefit the common man?


The amount allocated by the federal government for the annual development program in the next financial year has been increased to Rs 900 billion as against Rs 650 billion in the current financial year.

By increasing the annual development program, the government intends to spend more money on infrastructure development across the country.

The government wants to increase the productivity of various sectors of the economy by spending more money in the next financial year than in the current financial year through the annual development program.

The construction and improvement of infrastructure under the annual development program will lead to an increase in the production of cement, cement and other construction sectors, which can be helpful in the form of new jobs for the common man.

Budget for education and health

Salient features Budget of 2021-22

The federal government’s budget for education and health next fiscal year also includes measures. To protect people in the health sector from the corona virus, the government will spend 1. 1.1 billion on the purchase of vaccines, with a target of vaccinating 100 million people in the next financial year. Similarly, increase universal health coverage. It has been announced to provide medical facilities to as many people as possible.

In the field of education, the budget for higher education has been increased, through which the promotion of education has been announced.

Social security package for the poor and low-income people

The federal government has announced in the next financial year’s budget financial assistance under social security for the poor and low-income people of the society. The budget for the PTI-sponsored Ehsas Kifalat program has been increased in the next financial year to provide cash assistance to the poor and low-income people in the current difficult economic situation.

The amount for Ehsas Kifalat program for the next financial year has been increased from Rs. 210 billion to Rs. 260 billion. The government has announced that the money from the program will be used to help the poor and disadvantaged in the economic crisis caused by the corona virus.


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