Annual Budget 2006-07

The Federal Budget 2006-07 has been presented at the back of a sustained high economic growth. The objectives of the Federal Budget have been:


In the following text, the ‘budgeted year’ should be taken as Year 2006-07, and the ‘previous year’ as the Year 2005-06:

Public Sector Development Programme:


Relief to the Common Man:

(a)    the widow will receive one time grant ranging between Rs.200,000 to Rs.1.0 million, depending upon the grade of the deceased government servants;

(b)   the widow can retain the official accommodation provided to the deceased for up to 3 to 5 years;

(c)    once heir will get a contract job for two years in Grade 1-15;

(d)   one child will get free education until the age of 18 years;

(e)    the widow will receive life-long free medical facility;

(f)     2% quota is now fixed for the heirs of the government servants who die during service in Government Housing Scheme;

(g)    the members of the Law Enforcing Agencies who die during their service, their heirs will get a relief package according to the nature of the assignment performed by the deceased.


Increases in Rate of Return

Special Savings Certificates

from 8.6 % to 9.17 %.

Regular Income Certificates

from 8.88 % to 9.24 %.

Defence Savings Certificates

from 9.46 % to 10.0 %.

Pensioners Benefit A/c & Bahbood Savings Certificates

from 11.04 % to 11.52 %.

Savings Accounts

from 5.0 % to 6.0 %.

Prize Bonds Rate

from 5.1 % to 6.5 %.

To encourage private sector to import pulses the government will provide subsidy to importers so that pulses are imported and supplied in large quantity in the market.

The government is determined to enhance the supply of pulses in the market and keep their prices stable. Subsidy on imports and sale of daal through utility store will cost Rs.2.5 billion to the government.


The production of dairy products is now exempt from Sales Tax. The dairy and livestock equipments are exempt from custom duty and sales tax. The custom duty on the packaging material of dairy products has been reduced to 5 %. This will help promote dairy sector in rural area.

Rs.7.0 billion is being spent in 2005-06 for lining of 15,000 canals. Rs.6.0 billion will be spent in 2006-07 for the same. As a result, the loss of canal water will be reduced by 25%.

All these measures will help enhance agricultural activities in the country. This will increase the incomes of the farmers.

Promoting Investment and Growth:

1. Manufacturing:

2. Services Sector:

3. Automobile Industry:

Import of old/ used cars – Importability in TR, baggage and gift (for age of car) to be restricted to five years.

4. Transport Sector:

Export Promotion:

To increase export, the Government has introduced Export Promotion Package under which leather, shoe, marbles, granite and pharmaceuticals industries have been exempted from customs duty.

Self-Employment Generation:

National Bank of Pakistan will issue the loans. Under this scheme 1.8 million jobs will be created during a span of 5-years.

Welfare of the People:

i) Rs.4.0 billion is allocated for 6035 big filters for clean drinking water in villages and Union Councils.

ii) In the next two years, 425 more villages will get gas.

iii) Rs.35 billion has been allocated for Khushal Pakistan Program. This money will be spent on rural roads, village electrification, water supply, gas, education, health, sanitation and levelling of lands for irrigation purpose.

Pays and Pension:

Health Sector:

Education Sector:


1. Stock Market

i)            Withholding tax on brokerage commission on sale and purchase of shares has been increased from 0.005 % to 0.01 %.

ii)          Withholding tax on trading has been increased from 0.005 % to 0.01 %.

iii)         CVT on the purchase of share has been increased from 0.01 % to 0.02 %.

2. Real Estate

3. Cash Withdrawal from Banks:

Last year 0.1 % Tax was imposed on cash withdrawal of Rs. 25,000 or more from banks. Now, this tax rate is being enhanced to 0.2%

4. FOREX Dealing:

5% excise duty has been imposed on FOREX dealers.


Home Page