KPK BUDGET COMMENTARY, 2021

Overview

Overall the KPK Finance Bill has provided a way for streamlining the impacts of Covid-19 pandemic through multiple interventions in the form of multifold increase in health education and development expenditures through an agenda of Social Economic Growth and Development of merged areas and to uplift the quality of living of ordinary persons. The major increase in current expenditure which take ups over 67% of overall budget.

Set with a total outlay of Rs. 1,118 billion, the proposed KPK Budget, sets a local tax revenue target of Rs. 75 billion, in addition to receipts from federal government amount to Rs 559 billion, Profit from hydro Electricity (NHP) of Rs. 75 billion, and non-tax revenue of Rs 409 billion. Further the overall current revenue expenditure amounts to Rs 747 billion, whereas the current capital expenditure and current development expenditure is planned at Rs 262 billion and 109 billion respectively.

The major emphasis has been laid down to develop the merged areas. Development expenditure is perhaps the most critical component of this KPK budget. The Government of Khyber Pakhtunkhwa is dedicated to not only spend a sizable amount on the development of the province, but also to structure it in a systematic way. These reforms included multiple initiatives such as introducing a new ADP policy, issuing new ADP guidelines, reducing the throw-forward through ADP rationalization, and issuing a new release policy that ensured spending was done in a more responsible manner across the year.

In order to equalize the development expenditure across province of KPK an announcement for a separate development plan for merged areas wherein 100 billion of annual development expenditure has been set-aside for merged districts. Further, in order to face the challenges of Covid-19 by general public KPK Government has been set-aside 3.9 billion for Covid-19 related contingency in the overall expenditure.

The approach of the KPK Government is to facilitate the business during Covid-19 pandemic situation. KPK Government announce various tax reliefs for business. In order to streamline the post covid economic activities, KPK Government announce exemption from professional taxes, rebate on property taxes, exemption from vehicles registration fee and reduces the tax rates on various services. The aim of the Government is to help the layman by way of tax reliefs and indict impact of these relies on businesses.  

BDO EBRAHIM & CO.
DATED: JUNE 16, 2020