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LAHORE: The Punjab government has finalized a five-year financial plan to improve tax collection in the province, said sources. According to the plan, said the sources, new taxes would be introduced to increase tax collection in the province. It may be noted that the construction industry package of the Punjab government has waived some provincial taxes which were a major source of revenue generation.

The rate of sales tax was reduced on property builders and developers from 16% to Rs.100/sq. yard and Rs.50/ sq. ft. for land developers and builders respectively. The rate was also reduced to 5% for information technology services to encourage e-commerce and to 4% for ride-hailing services. Therefore, the Punjab government is seriously pondering over the ways and means to increase tax collection.

Similarly, the Punjab government through the Finance Act, 2020, the rate of Punjab sales tax on services on more than 25 services was reduced to support COVID-affected sectors to boost compliance and encourage documentation.

The Punjab government had reduced the rate of PSTS from 16% to 5% for various sectors that were affected by the outbreak of the COVID-19 pandemic, including marriage halls and lawns, small hotels, caterers, tour operators, rent-a-car services, photographers, gyms and manpower recruitment services. In addition, the rate of PSTS on health insurance, medical consultancy and hospital charges was reduced to 0% to cut the cost of healthcare for the public.

The Punjab government also reduced the rate of sales tax on restaurant and beauty parlour services from 16% to 5% in case of payment through credit / debit cards. This widely appreciated move was aimed at promoting documentation of the economy and has started to pay dividends as the proportion of customers using cards for payment is on the rise.

The sources said Chief Minister Punjab Sardar Usman Buzdar has approved the plan, which also speaks at length about modernization of tax collection in the province.

Meanwhile, the Punjab Revenue Authority (PRA) has collected Rs.73.7 billion from July to December 2020 registering a phenomenal growth of 41.6% over the Rs.52.1 billion collected in the first half of the previous financial year.

Copyright Business Recorder, 2021