Budget 2014-15: 5.2% growth target set for services sector

Government introduces housing and housing finance schemes, seeks to bring the retail sector under the tax net

The 2014-15 growth target for the services sector, which failed to meet last year’s growth target by 0.2%, has been set at 5.2%, compared to 4.5% last year.

The only subsectors in services that met their targets were the wholesale/retail trade sector, which grew 5.2%, surpassing the 4% target, and housing services, which just met the growth target of 4%.

Every other subsector failed to meet its growth target.

The government now aims for a GDP growth rate of 5.1% in the fiscal year 2014-15, compared to last years target of 4.4% which the economy failed to meet by 0.3%.

Linking retailers' utility bills with their NTN

The Finance Ministry has proposed to bring the retail sector under the tax net by linking their utility bills with their national tax number, the Finance Bill revealed, a copy of which has been obtained by Express News.

Large retail stores have been paying their taxes, the government, however, has long been struggling to bring the small retailers under the tax net.

The finance ministry, according to the document, proposed to link the utility bills of retailers with their NTN, which will help the government in tracing the tax record of retailers. Likewise, any new entrant or entrepreneur will have to obtain an NTN for paying his utility bills so that the government can trace bring him in the tax net.

Given the size and potential of Pakistan’s retail sector, the national exchequer can raise significant amount from this segment – if the proposals are materialised.


In his speech the Finance Minister also revealed that 500 telecenters will be established over the next three years using Rs12 billion from Universal Service Fund (USF). The USF was established by the Ministry of Information Technology specifically for the development of IT infrastructure in remote areas.

The USF is funded by telecom companies, which contribute 1.5% of their revenues for this purpose.


Minister of Finance Ishaq Dar in his budget speech announced that the government has designed a low-cost housing guarantee scheme to increase home ownership in low-income groups. Under the scheme, financial institution will offer loans of up to Rs1 million 40% of which will be guaranteed by the government. The scheme will cover all of Pakistan and loans worth Rs20 billion will be provided.

In addition to the above, a Rs6 billion low-cost housing scheme has also been introduced.


Dar announced in his budget speech a mortgage refinance company that will be established with a broad shareholding of the government, commercial banks and development finance institutions to generate long-term liquidity for housing finance. The government will invest Rs1.2 billion in the equity of the company.

The minister also announced the government's intention to revive and restructure the House Building Finance Company (HBFC). The measures highlighted include immediate formation of the board of directors, improvements in efficiency and capacity, simplification of procedures, and measures to recover non-performing loans.


In his budget speech, the minister said that an advance tax of 3% may be levied first class and business class tickets for passengers who pay their income taxes, and 6% for passengers who have not paid their income tax in the preceding year. Passengers travelling in economy class are exempt from this tax.

This story will be updated as more analysis comes in.


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