The Pakistan government passed the FY24-25 Budget in parliament on Friday, paving the way for the resumption of negotiations with the IMF for a new programme. Despite pushback from certain industries, the budget is expected to bring positive changes, particularly for export sectors (excluding services-based industries). While exporters of goods will be brought under the normal corporate tax regime, this could lead to a more equitable tax system.

Furthermore, according to IMS Research, the budget has significantly impacted the cement, steel and construction industries. In turn end users will see high cost of construction. The measures include"
1. Federal PSDP has been reduced from PKR1.4trn (US$5.02bn) proposed earlier to PKR1.15trn.
2. Federal excise duty (FED) on cement bag has been increased from PKR2/kg to PKR4/kg (previously it was being increased to PKR3/kg).
3. The proposed tax exemption on the supply and import of iron and steel scrap has been restricted, and the supplies made by manufacturer and exporters of recycled copper authorised under the Export Facilitation Scheme, 2021, have been excluded from the exemption.
4. A special tax regime for builders and developers sets 10-15 per cent of gross receipts as taxable profit, which is taxed at individual or company rates based on their status.

A spokesperson for the All Pakistan Cement Manufacturers Association (APCMA) emphasised that the domestic market is pivotal for the cement industry, and 30 June uptake during the FY23-24 calls for serious attention from policymakers. He said that the situation calls for lowering duties and taxes on cement, but on the contrary, the government has increased excise duty from PKR2000/t to PKR4000/t in the Budget FY24-25, which is likely to dampen the demand further. Cement is not a luxury item but a basic necessity, and the government must take measures to reduce the construction cost to make it affordable for the masses, he added.

Meanwhile, DG Khan Cement informed the Pakistan Stock Exchange last week that the cost of cement bags has increased by PKR125.