Stamp duty contributes more than any other tax category
HAMID WALEED
LAHORE: Stamp duty contributes more than any other tax category in Rs18 billion tax relief announced by the government of Punjab.
According to the official documents available with Business Recorder, the rate of stamp duty has been slashed heavily; incurring an impact of Rs10 billion out of the total tax relief. Stamp duty/CVT/fee and all local and provincial taxes on property-related transactions fall under the domain of Board of Revenue, which are reduced to 2 percent from earlier 6 percent for the next three months, - from 1st of April to 30th of June, 2020.
The urban immovable property tax (UIPT) would be the second-highest head where the Punjab government has suspended the tax for the next three months, and the total contribution of UIPT has been calculated around Rs3.5 billion.
The withdrawal of electricity duty is the third area where the government has extended Rs2.3 tax relief during the next three months. It is followed by the suspension of Rs1 billion Punjab infrastructure development cess (PIDCs), Rs 800 million sales taxes on construction services and Rs200 million professional taxes from April – June 2020.
It may be noted that the Punjab government has estimated a total revenue impact of Rs2.5 billion, however, independent estimates suggest it may extend to Rs5 billion approximately if the impact of construction and public sector holding is taken into account as there would be no development activity in near future.
The Punjab government has amended the Punjab Sales Tax on Services Act 2012 and has reduced the rate of sales tax to zero from earlier 16 percent up to June 30, 2020. According to the notification, in the exercise of the powers conferred under subsection (1) of section 5 of the Punjab Sales Tax on Services Act 2012, the rate of sales tax has been slashed to zero on hotels, motels, guests houses, marriage halls, lawns (by whatever name called) including pandal and shamiana services, catering services (including all ancillary/allied services such as floral or other decoration, furnishing of space whether or not involving rental of equipment and accessories).
However, the rate of sales tax would remain intact as 16 percent on clubs including race clubs and their membership services including service, facilities or advantages, for a subscription or any other amount to their member.
According to the amendments, the rate of sales tax has been reduced to 13 other categories which included contractors, construction services, beauty parlors, salons, clinics, consultants, travel agents, property dealers, rent-a-car service providers, car dealers, gyms, healthcare, indoor games, laundry and dry cleaners, cable operators, services in textile and leather sectors, apartment houses management, real estate management services, doctors, medical consultants, health insurance, life insurance and bedrooms of hospitals. However, the rate of sales tax on services would remain intact on all the insurances, other than health and life insurances. The Punjab government sources have told this scribe that notifications from the Board of Revenue and Excise & Taxation Department are still awaited.
