PESHAWAR: In another tax relief package, the Khyber Pakhtunkhwa government has proposed to reduce and rationalize sales tax on 31 different services in the province.
According to a press release issued by Khyber Pakhtunkhwa Revenue Authority (KPRA), the sales tax on 10 different services have been brought down to only 1 % for the fiscal year 2021-22. Last year, the Khyber Pakhtunkhwa government had reduced sales tax on 29 different services as a tax relief package to the businesses and this year the sales tax rates on different sectors have been reduced and rationalized mostly on the requests of the taxpayers’ community.
To provide relief to the business community, the Chief Minister Khyber Pakhtunkhwa Mahmood Khan and KP Minister Finance Taimur Khan Jhagra issued special directives to the KPRA for reducing tax rates certain sectors associated with services. The changes in the sales tax on services have been proposed in the Finance Act 2021 which will be legislated by the provincial assembly in the ongoing budget session.
“On the directives of the Chief Minister Mahmood Khan, we are taking special measures to compensate the business community affected by the pandemic. The tax relief for the second consecutive year is one of the measures the provincial government is taking to mitigate the impacts of the pandemic on the businesses particularly related to the services sector,” said the Finance Minister Taimur Khan Jhagra in his message.
According to details, the sectors inserted in the 1% tax slab includes Print Media advertisements, Property Dealers, Agriculture Cold Storage and Warehouse, Industrial workshops, Car wash services, Cinematographic services, Quality assurance and inspection services, Auctioneers, installation and commissioning services and Under Writer services.
To promote tourism in the province, the government has specially reduced sales tax on Hotels and Restaurants located in Naran and Kaghan areas of the province from 8% to only 5%. Similarly, services relating to Mines and Minerals including government, royalties, licenses that were earlier taxed at 15% rate have been decreased to only 2%. Agriculture-related services that were covered under different tax slabs have been brought down to single slab of 2%. Sales tax on services provided by Clubs and sales tax on local standalone and local chains of hotels have been reduced from 15% to 8%.
Tax rates on few services that were reduced in the year 2020-21 have been rationalized and brought back to standard rates on the request of the taxpayers from the corporate sector because their backward and forward business linkage are fully documented and they need normal input tax adjustments not at their end but also for their customers from business circles.
Khyber Pakhtunkhwa Minister Finance Taimur Khan said “The government is committed to provide relief to the businesses in the province. Last year the incumbent government had given a tax relief package in budget and this year more sectors have been proposed to be included in reduced tax slab with minimal rates.
The government wants to encourage investment to the province and increase tax compliance and tax base,” said Fayyaz Ali Shah, the Director General KPRA in his statement.
Copyright Business Recorder, 2021