Revival of business activities: Rs51bn tax relief proposed

LAHORE: The Punjab government has proposed Rs 51 billion comprehensive package of tax relief for revival of business activities and growth in the fiscal year 2021-22. No new tax has been imposed in the budget and the government has tried to make it a business-friendly budget in the context of Covid-19.

Meanwhile, relief given to about 23 sectors during the last fiscal year would continue, further tax reduction from 16 percent to 5 percent has been extended to 10 more services, rate of tax on call centres has been reduced to 16 percent from 19.5 percent.

According to the budget documents, the board of revenue would continue with 1 percent stamp duty rate with a total impact of Rs 40 billion to boost construction activities in the province and attract new investment to the sector.

Also, the Punjab government has decided to continue with reduced sales tax rate of 5 percent, instead of 16 percent, on more than 25 services in the next fiscal year. It may be noted that the Punjab government had introduced this rate during the current fiscal, which would continue next financial year as well. These services included small hotels and guest houses, marriage halls, lawns, marquees, tent and catering services, information technology services, tour operators, gyms, property dealers, rent-a-car service, cable TV operators, treatment of textile and leather, commission agents of agriculture commodities, accounting and taxation, auditing, consultancy services, photography and parking services.

The budget documents have suggested that the Punjab government has added 10 more services to this list, including beauty parlours, fashion designers, home chefs, architect, laundries and dry cleaners, supply of machinery, warehouse, dress designers and rental bulldozers etc.

The Punjab government has fixed tax rate at 16 percent for cash payment by restaurants and 5 percent through credit or debit card payments that helped documentation of the economy. Also, the public at large had appreciated the step. Therefore, the Punjab government has proposed to reduce tax rate to 5 percent on mobile wallet and payment through QR code. Under the excise and taxation department, the government would facilitate taxpayers in payment of property tax in two instalments during the next fiscal like the present one. The Punjab government has also proposed to restrict penalty against surcharge on property and motor vehicle to the last two quarters of the next fiscal year.

Copyright Business Recorder, 2021