Budget 2020-21: Rs56bn tax relief for small businesses in Punjab budget.

Byline: Nasir Jamal

LAHORE -- Punjab Finance Minister Makhdum Hashim Jawan Bakht reads out the budget speech at a local hotel where the provincial assembly's current session is in progress under the Covid-19 SOPs.-M. Arif / White Star

LAHORE: Facing an uncertain income stream amid surging number of Covid-19 infections and deaths across Punjab, the Usman Buzdar government's Rs2,240.7bn budget for the next financial year announced on Monday proposed to modestly increase development and current spending, including coronavirus-related expenditure of Rs50bn, give significant tax relief of Rs56bn to small businesses affected by the pandemic outbreak, encourage digitisation and documentation of the economy, and, at the same time, produce a cash surplus of Rs125bn to hold down the federal fiscal deficit.

Hours before Punjab Finance Minister Makhdum Hashim Jawan Bakht read out his third budget speech, the provincial health authorities announced enforcing lockdown in several areas of Lahore with 300 or more infections each to halt the spread of the disease. By Monday evening, Punjab reported more than 54,000 infections as it became the first province where the number of Covid-19 deaths crossed the 1,000 mark.

The budget documents show allocation of Rs68.3bn for Covid-19 mitigation expenditure, including Rs35bn for 20 per cent of the existing healthcare workers, Rs10bn for new recruitments to overcome the shortage of caregivers, tax relief of Rs10bn and block allocation of Rs13bn for any emergency expenditure.

Other major initiatives linked directly or indirectly to Covid-19 mitigation measures include reduction of taxes on construction businesses, emphasis on digitisation of economy through additional special rebates on payment of certain taxes digitally, reduction in taxes on internet services and a significant cut in services GST on restaurants on payment through debit or credit cards.

Rs68.3bn set aside for Covid-19 mitigation expenditure; education to get Rs391bn and health Rs284bn; Rs337bn earmarked for development projects

The budget offers substantial fiscal incentives to businesses relating to property and construction and has set aside Rs40bn for Punjab Cities Programme and funds for developing new tourism sites. Education will get Rs391bn, including Rs34bn for development schemes. An amount of Rs284bn has been allocated for health, which includes Rs33bn for development like upgrade of hospitals in south Punjab.

The budget documents show...