Fiscal Policy of Pakistan for the preparation of FPSC test for Inspector Inland Revenue . Fiscal Policy of Pakistan 2021-22 for the online preparation of Inspector Inland Revenue in FBR announced by Federal Public Service Commission.
Fiscal Policy of Pakistan for Preparation of FPSC Inpsctor
What is mean by Fiscal Policy ?
Ans. Fiscal Policy Means the use of taxation, Public Expenditure by the Government for the purpose to run affairs of the state and development in the Country. According to Samuelson Fiscal Policy is concerned with all those arrangements which are adopted by the Government to collect the revenue and make the expenditures so that economic stability could be maintained and attained without inflation deflation. (Source : Wikipedia)
Fiscal Policy of Pakistan
Fiscal Policy of any Country changes each year and it is announced in the each financial Year. Same is the case with Fiscal Policy of Pakistan as it differs from year to year.
The Government receipts consist of the following four sources:
1. Revenue Receipts
The Government of Pakistan mainly depends on the revenue receipts. In Pakistan Government Collects revenue about 60-70% from revenue receipts. It includes tax revenue, non-tax revenue, and surcharges.
(a)Tax Revenue: Tax Revenue means the revenue collected by the Government of Pakistan in the form of taxes. In taxes we have direct taxes such as income tax, Withholding tax, and property tax. Indirect taxes such as central excise, sales tax, and custom duty. Direct tax comprises about 70% of Pakistan’s total tax revenue.
(b)Non-Tax Revenue: It includes income from government property and enterprises and receipts from Civil Administration and other functions.
(c)Surcharges: Surcharge means an additional charge or Payment. Government of Pakistan also collect revenue from Surcharges on natural gas and petroleum fall under this category.
Capital Receipts are incoming cash flows that create liability. Capital receipts include external borrowing and internal non-bank borrowings consisting of unfunded debt, public debt, treasury and deposit receipts besides the revenue account surplus and the surplus generated by public sector, etc.
External resources are loans and grants which come from various sources. These sources include consortium, non-consortium and Islamic sources of aid:
(a)Consortium: Consortium means an association typically of several companies. Consortium provides aid at both bilateral and multilateral levels to Government of Pakistan.
(i)Sources of consortium are bi lateral aid are UK, US, Belgium, Canada, France, Germany, Italy, Japan, Netherlands, Norway, Sweden.
l aid comes from Asian Development Bank (ADB), International Bank for Reconstruction and Development (IBRD), Int. Development Association (IDA), Int. Finance Corporation (IFC), and Int. Fund for Agricultural Development (IFAD).
Non-Consortium: Non-consortium sources of loans and grants mostly provide bilateral aid. These include Australia, China, Czech Republic, Denmark, Finland, Rumania, Switzerland, Russia and Yugoslavia.
(c) Islamic Aid Bilateral aid from Islamic countries come from Saudi Arabia, Kuwait, Qatar, United Arab Emirates, Turkey, Lebanon, Libya and Iran. While multilateral Islamic sources of aid are OPEC Fund, and IDB Loans and grants received by Pakistan can be classified into ‘project’ and ‘non-project aid’. Non-project aid can be further decom
Self-Financing by Autonomous Bodies: There are many autonomous bodies at Federal and Provincial level which are earning revenue for the Government . This is actually the surplus left after meeting all the expenses of these bodies.
This surplus is available to government for revenue and development expenditures. Government Expenditure Government expenditure is classified into current expenditure and development expenditure:
1.Current Expenditure: It consists of mainly general administration, community services, Defence , social services, law and order, subsidies, ,economic services, grants to Azad Jammu and Kashmir, Railway and others.
2.Development Expenditure: Government’s development expenditure also known as Public Sector Development Program (PSDP. The priority areas are transport and communication, power and water. These three sectors combined cover about 50% of total allocation of PSDP. it constituted around 70-80% of total Government expenditure.
There are six major heads of current expenditure of Federal Government of Pakistan
- Debt servicing
- Subsidies and grants
- General administrative
- Social services