Federal Budget 2022-23 – First Cut

Research in collaboration
Friday, 10 June, 2022 with Capital Stake

Salient Features

• The Federal Budget for FY22 was presented in the National Assembly today. The total outlay for
fiscal year is budgeted at Rs9,502bn
• The Budget was in accordance with the expectation of the market.
• Government expects GDP to grow at 5% during the next year from 5.97% recorded in FY22.
• Fiscal deficit to come down to 4.90% of GDP and continue to decline touching 2.80% by FY25
• Inflation to reduce from 11.70% in FY22 to 11.5%
• FBR Tax revenue to rise incrementally each year aiming to reach 10% in FY25

Exhibit 1 – Key Macroeconomic & Budgetary Targets

Indicator Budgeted Revised Projections

2021-22 2021-22 22-23 23-24 24-25
Economic Growth 5.00% 5.97% 5.00% 5.80% 6.20%
Inflation 8.20% 11.70% 11.50% 8.60% 7.40%
FBR Tax - % GDP 10.70% 8.96% 9.00% 9.40% 10.00%
Overall Deficit - % GDP -6.30% -7.10% -4.90% -4.00% -2.80%
Overall Primary Balance - % GDP -0.70% -2.40% 0.20% 0.90% 1.80%
Source: Ministry of Finance

This research report has been prepared by Munir Khanani Securities Limited (MMMAKS) in collaboration with Capital Stake (CS), a brand of CS Solutions (Pvt) Limited,
and marketed jointly by CS & MMMAKS. This report is for information purposes only and does not constitute nor is it intended as an offer or solicitation for the
purchase or sale of securities or other financial instruments.
Federal Budget 2022-23 – First Cut
Research in collaboration
Friday, 10 June, 2022 with Capital Stake

Exhibit 2 – Revenue Receipts

Budget Rev ised Variance FY22 Budget % of Tot al

2 0 2 1- 2 2 2 0 2 1- 2 2 ( B ud g et V s R evised ) 2022- 23
Tax Rev enue Receipt s 5,829,000 6,000,000 2.93% 7,004,000 56.39%
FBR Taxes 5,829,000 6,000,000 2.93% 7,004,000 56.39%
Direct Taxes 2,182,000 2,204,000 1.01% 2,573,000 20.71%
Indirect Taxes 3,647,000 3,796,000 4.09% 4,431,000 35.67%
Non-Tax Rev enue Receipt s 2079965 1315149 -36.77% 1999896 16.10%
Levies and Fees 29,503 29,888 1.30% 35,151 0.28%
Income from Property and Enterprise 29,503 29,888 1.30% 265,839 2.14%
Receipts from Civil Administration etc 684,105 300,078 -56.14% 279,647 2.25%
Miscellaneous Receipts 1,100,518 476,536 -56.70% 1,331,053 10.72%
Tot al Rev enue Receipt s 7,908,965 7,315,149 -7.51% 9,003,896 72.49%
Capital Receipts 1,439,879 2,507,711 74.16% 2,407,680 19.38%
Total Internal Receipts 9,348,845 9,822,860 5.07% 11,411,576 91.87%
Ext ernal Receipt s 2,747,792 3,114,355 13.34% 3,166,333 25.49%
Tot al I nt ernal and Ext ernal Receipt s 12,096,636 12,937,215 6.95% 14,577,908 117.36%
Public Account Receipt s 74,195 -244,564 -429.62% -125,197 -1.01%
Gross Federal Resources 12,170,832 12,692,651 4.29% 14,452,712 116.36%
Less Prov incial Share in Federal Taxes 3,411,858 3,511,961 2.93% 4,099,773 33.01%
Net Federal Resources 8,758,974 9,180,690 4.81% 10,352,939 83.35%
Cash Balance built up by t he Prov inces 570,000 570,000 0.00% 800,000 6.44%
Priv at izat ion Proceeds 252,000 - 96,410 0.78%
Credit from Banking Sect or 681,336 872,999 28.13% 1,171,821 9.43%
Tot al-Resources 10,262,309 10,623,689 3.52% 12,421,170 100.00%

Source: Ministry of Finance

Note: All Amounts in Rs millions

This research report has been prepared by Munir Khanani Securities Limited (MMMAKS) in collaboration with Capital Stake (CS), a brand of CS Solutions (Pvt) Limited,
and marketed jointly by CS & MMMAKS. This report is for information purposes only and does not constitute nor is it intended as an offer or solicitation for the
purchase or sale of securities or other financial instruments.
Federal Budget 2022-23 – First Cut
Research in collaboration
Friday, 10 June, 2022 with Capital Stake

Exhibit 3 – Summary of Expenditure

Budget ed Rev ised Variance FY22 Budget % of Tot al

2 0 2 1- 2 2 2 0 2 1- 2 2 ( B ud g et V s R evised ) 2022- 23
Current Expendit ure on Rev enue Account
General Public Services 5,435,201 5,618,043 3.36% 6,288,938 50.63%
Defence Affairs and Services 1,373,275 1,483,922 8.06% 1,526,698 12.29%
Public Order and Safety Affairs 178,511 191,491 7.27% 208,761 1.68%
Economic Affairs 115,243 454,092 294.03% 138,803 1.12%
Environment Protection 436 452 3.67% 749 0.01%
Housing and Community Amenities 34,597 5,463 -84.21% 7,850 0.06%
Health* 28,352 154,889 446.31% 19,582 0.16%
Recreation, Culture and Religion 10,372 12,380 19.36% 10,990 0.09%
Education Affairs and Services 91,970 90,861 -1.21% 90,556 0.73%
Social Protection 255,292 362,205 41.88% 370,103 2.98%
Current Exp. on Revenue Account 7,523,248 8,373,798 11.31% 8,663,029 69.74%
Current Exp. on Capital Account 1,601,211 1,816,227 13.43% 2,734,273 22.01%
Tot al Current Expendit ure 9,124,459 10,190,025 11.68% 11,397,303 91.76%
Dev . Exp. on Rev enue Account 599,080 190,295 -68.24% 453,275 3.65%
Dev . Exp. on Capit al Account 538,770 243,370 -54.83% 570,592 4.59%
Tot al Dev elopment Expendit ure 1,137,850 433,664 -61.89% 1,023,867 8.24%
Tot al - Expendit ure 10,262,309 10,623,689 3.52% 12,421,170 100.00%

Source: Ministry of Finance

Note: All Amounts in Rs millions

This research report has been prepared by Munir Khanani Securities Limited (MMMAKS) in collaboration with Capital Stake (CS), a brand of CS Solutions (Pvt) Limited,
and marketed jointly by CS & MMMAKS. This report is for information purposes only and does not constitute nor is it intended as an offer or solicitation for the
purchase or sale of securities or other financial instruments.
 Federal Budget 2022-23 – First Cut
Research in collaboration
Friday, 10 June, 2022 with Capital Stake

Other Key Announcements

Macroeconomic Indicators

• Total Budget Outlay set at PKR 9,502bn for FY22

• FY23 GDP growth target at 5% YoY
• FBR Tax revenue target at Rs7,004 bn, of which Rs4,100 bn will be provincial share
• Non-Tax revenue is expected to be Rs1,315 bn
• Budget deficit for FY23 has been forecast at PkR3,798bn
• PSDP allocated an amount of Rs800bn

Relief Measures:

• Salaried Individuals income upto Rs 1.20mn per annum exempt from taxes
• Minimum income threshold for AOPs and Business individuals increased from Rs 400,000 to Rs
600,000 per annum
• Local & Imported Solar Panels exempted from sales tax
• Tractors and agricultural equipment get exempted from sales taxes along with seeds
• 30 Active Pharmaceutical Ingredients (APIs) get exemption from customs duty
• Synthetic yarn’s structure of regulatory duty to be rationalized

Revenue Measures:

• Tax Credit withdrawn on health insurance

• Tax credit also withdrawn from contribution in pension funds, investment in shares and
insurance
• Cars with 1600+CC engines will be subject to additional advance taxes
• International payments made through Credit card, debit card and prepaid cards to be subjected
to adjustable withholding tax of 1% for filers and 2% for non-filers
• Tax on Behbood certificate, pensioners benefit account profit to reduce from 10 to 5%
• Anyone holding more than one property worth Rs 25mn to be taxed at 5% of fair market value,
deemed as the rental income, at a tax rate of 1% of fair market value
• Advance tax on buying sale of property up to 2% for filer and 5% for non-filer
• Banks to pay 3% Windfall Tax, taking cumulative tax rate to 42%

This research report has been prepared by Munir Khanani Securities Limited (MMMAKS) in collaboration with Capital Stake (CS), a brand of CS Solutions (Pvt) Limited,
and marketed jointly by CS & MMMAKS. This report is for information purposes only and does not constitute nor is it intended as an offer or solicitation for the
purchase or sale of securities or other financial instruments.
Federal Budget 2022-23 – First Cut
Research in collaboration
Friday, 10 June, 2022 with Capital Stake

Autos

• Imposition of advance tax on vehicles with engine capacity more than 1600cc
• Advance tax to increase to 2% on electric vehicles
• Removal of Custom Duty on agricultural machinery including tractors.

Banks

• Imposition of super tax of 3% would take the tax to 42% from 39%
• All international debit and credit card transactions to attract 1% (Filer) and 2% (non-Filer),
respectively in advance withholding tax. However, this tax will be adjustable against final income
tax.

Cement and Steel

• Allocation of PKR 100bn for Dams

• 1st year depreciation limit increased to 100% form 50%

IT and Telecom

• PKR 17bn earmarked to promote IT exports

Pharmaceutical

• Exemption of duties on more than 30 items on APIs

Textile

• Release of DLTL claims of PkR 40.5bn

Entertainment

• 5yr tax holiday for film makers, new cinema production houses, film museums
• 10yr export tax rebate on film and drama
• Film producers exempt from income tax. Rebate given to foreign film producers producing films
locally (condition is that 70% content should be local)

Food

• Removal of sales tax on the supplies of seeds of wheat, maize, sunflower, canola, etc.

This research report has been prepared by Munir Khanani Securities Limited (MMMAKS) in collaboration with Capital Stake (CS), a brand of CS Solutions (Pvt) Limited,
and marketed jointly by CS & MMMAKS. This report is for information purposes only and does not constitute nor is it intended as an offer or solicitation for the
purchase or sale of securities or other financial instruments.
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it intended as an offer or solicitation for the purchase or sale of securities or other financial instruments.

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This research report has been prepared by Munir Khanani Securities Limited (MMMAKS) in collaboration with Capital Stake (CS), a brand of CS Solutions (Pvt) Limited,
and marketed jointly by CS & MMMAKS. This report is for information purposes only and does not constitute nor is it intended as an offer or solicitation for the
purchase or sale of securities or other financial instruments.