Sales tax on services in next fiscal: Punjab govt not to withdraw corona relief

LAHORE: The Punjab government has decided not to withdraw corona relief for sales tax on services during the next fiscal year, said reliable sources.

It may be noted that the Punjab government had reduced sales tax on services from 16% to 5% on over 20 services last year to avoid negative impact of the pandemic of COVID-19.

Sources from the Punjab Revenue Authority (PRA) told this scribe that the Authority had also received a budget proposal of bringing down sales tax to 5% on all the 70 services, covered under the ambit of sales tax on services in the province. However, the Punjab government had turned down this proposal and preferred to continue with its old arrangement of providing Corona relief on over 20 services, they added. They made it clear that no more services would be added to the list taxable items in the next fiscal year.

Meanwhile, the sources said the Authority is also ready to set up a sub-office in district Murree right after the budget. Rawalpindi commissionerate would look after the affairs of this sub-office. Also, they said, the Authority has assessed the tax potential of the district and the tax target would be disclosed after the introduction of the next year finance bill. Earlier, the Authority had opened a sub-office in Sialkot, which is functional successfully at present.

They said the Authority has also installed Electronic Information Management System (EIMS) at 950 points throughout the province. According to the sources, the Authority would also impose 5% sales tax on the tickets upto Rs500 being charged by the entertainment industry.

The purpose is to bring the entertainment industry into the tax net, which was enjoying waiver for duty for the past 15 years. The Authority has already initiated compulsory registration of cinemas and theatres in the city by the month of April.

The sources said the Authority was also pondering over settling the issue of double taxation on account on service origination and termination besides charging of double infrastructure development cess on transports entering into the province from the province of Sindh. They said the issue of double taxation was haunting the Authority time and again and the issue has also been referred to Dr Mahboob-ul-Haq Research Institute for financial analysis of the move. The objective would be to assess the impact after withdrawal of double taxation on the revenue, they added.

It is worth noting that the Authority is also set to launch Inland Revenue Information System (IRIS) from the next fiscal year to automate all of its services. Earlier, said sources, the Authority was responding to complaints of taxpayers manually, a practice that would come to an end once and for all.

Copyright Business Recorder, 2022