Currently, agricultural income is taxed by the province at a much lower rate than personal income tax, leading to IMF demands for parity. The provincial government collects 1% stamp duty and 1% corporation/TMA fees on the total DC value rate of property during transfers. There are no changes to these existing fees or increases in current agricultural taxes, such as Abiana, which may challenge revenue targets.
Punjab Finance Minister Mujtaba Shujaur Rehman, in his budget speech, emphasized that the budget includes an Annual Development Programme (ADP) of Rs842 billion, a 28% increase from the previous year’s Rs655 billion. Significant allocations have been made for education, health, and agriculture, with initiatives like the laptop and Kissan card schemes.
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Mr. Rehman stated that the surplus budget aims to execute Chief Minister Maryam Nawaz’s 100-day roadmap. “Today, we have begun the development of the province. Today, we are presenting Punjab’s biggest ever tax-free and surplus budget,” he maintained. The budget documents show a surplus of Rs630 billion.
The budget also proposes distributing solar panels free of cost to those consuming up to 100 electricity units monthly. Various provincial fees and taxes have been rationalized, with court fees increased through amendments to the Court Fees Act of 1870. For instance, a fee of Re1 has been raised to Rs100, and Rs5 to Rs500. The Stamp Duty Act of 1899 has also been amended, increasing the valuation of Rs100 stamp papers to Rs1,000 and Rs1,200 to Rs3,000. Amendments to the Punjab Urban Immovable Property Tax Act of 1958 introduce a self-assessment mechanism for property taxes, now to be collected according to the capital value (DC rate) instead of the rental table.
The government will have the authority to declare any property as high-value, with property owners informed of the specific procedure for self-assessment. The assessing authority can audit self-assessments, imposing fines for underpayment or tax evasion. If a property owner does not self-assess, a two-week grace period will be provided. For capital value tax collection, residential property worth Rs5 million will be exempt, while commercial property of the same value will be taxed at 0.07%. Tax rates increase for properties valued above Rs 5 million, up to a maximum of 0.09% for properties worth over Rs.25 million.
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Similar to the federal budget, the provincial government has shifted the motor vehicle registration regime from engine capacity to the vehicle’s total value to enhance fee collection.
Finance Minister Rehman highlighted the focus on uplifting businesses and providing public relief. He noted the budget’s 100% cash-covered ADP and efforts to reduce government size and expenditures while increasing revenues without burdening the poor.
The budget projects earning over Rs4.643 trillion in revenue, with expenditures amounting to Rs4.816 trillion. The government will receive Rs3.683 trillion from the federal divisible pool under the NFC award. The projected provincial revenue collection is Rs960 billion, 54% higher than the current year, including Rs300 billion from the Punjab Revenue Authority (PRA), Rs105 billion from the Board of Revenue (agriculture tax, etc.), Rs57 billion from Excise and Taxation, and Rs488 billion from non-tax revenue.
Salaries and pensions: The Punjab government, like the federal government, has proposed a 25% salary increase for government employees (grades 1 to 16), a 20% raise for officers (grades 17 to 22), and a 15% increase in pensions. The minimum wage has been increased from Rs32,000 to Rs37,000.
A sum of Rs603 billion has been allocated for salaries, Rs451.4 billion for pensions, and Rs857 billion for local governments.
Health and education: The education budget has been increased by 13% to Rs669.74 billion, including Rs604.3 billion for non-development expenses and Rs65.5 billion for development-related expenditures. School education has been allocated Rs42.5 billion for repairing/restoring school buildings, adding new classrooms, IT labs, and afternoon schools during FY2024-25. An additional Rs2.5 billion has been set aside for modern education for underprivileged students, Rs100 million for an endowment fund, Rs17 billion for higher education (scholarships, laptops, university in Murree, and college facilities), Rs2 billion for special education, and Rs4 billion for non-formal education.
The health sector will receive Rs539.15 billion, including Rs410.55 billion for non-development and Rs128.60 billion for development expenses. Primary and secondary healthcare departments will get Rs42.6 billion, with Rs55.4 billion allocated for upgrading OPDs in hospitals and providing medicines to patients. Around Rs86 billion has been earmarked for the specialized healthcare department. The budget also includes Rs143 billion for road rehabilitation across Punjab, Rs6.4 billion for fisheries and wildlife, and Rs1.4 billion for women development.