Punjab govt brings vehicle dealers into tax net

LAHORE: The Punjab government has brought tractor and other vehicles’ dealers into the tax net. It has also brought the professionals into tax net as they were assessed to pay income tax during the preceding financial year. Earlier, such professionals were exempted from professional tax in Punjab. The tax rate is Rs 200 per annum.

The government has repealed the Punjab Entertainment Duty Act 1958 (X of 1958). Now the government has bought the entertainment services (including cinemas, theatres, concerts, circus, sports events, races, films, fashion shows and mobile stage shows) under the purview of the Punjab Revenue Authority (PRA) with introductory zero per cent without input tax adjustment.

In view of a proposal to assign the subject matter of entertainment duty to the Punjab Revenue Authority (PRA), the Punjab Entertainment Duty Act 1958 is to be repealed while amending the Punjab Sales Tax on Services Act 2012 for this purpose. However, the government continued the tax relief measures of Rs 51 billion given in the ongoing fiscal year including motor vehicle tax, property tax, Punjab Sales Tax on Services on various services. The government announced that a discount equal to five per cent of the tax being paid shall be allowed on payment of tax through e-payment system in the Punjab Urban Immovable Property Tax Act 1958 for the financial year 2021-22.

The tax shall be paid on a yearly basis or half a yearly basis and for the financial year 2021-22, the tax shall be collected as follows (i) in the first quarter with five per cent rebate in the amount of annual tax, (ii) in the second quarter, the amount of annual tax without any rebate; and (iii) in the third and fourth quarters, the amount of annual tax with one per cent surcharge per month on the gross payable tax. Similarly, the government has given relaxation to taxpayers through the Punjab Motor Vehicle Taxation Act 1958 for the financial year 2021-22 by giving a discount equal to five per cent of the tax being paid. In the financial year 2021-22, the tax shall be collected as follows: in the first quarter with 10 per cent rebate in the amount of annual tax; in the second quarter, the amount of annual tax without any rebate; and in third and fourth quarters, the amount of annual tax with such penalty as may be determined under Section 9.

The relief in motor vehicles tax in respect of old vehicles is proposed to be withdrawn to discourage the use of such vehicles to ensure less pollution. Similarly, a discounted rate of motor vehicles tax for electric vehicles has been provided to promote the use of electric vehicles.

In case of e-payment of urban immovable property tax and motor vehicles tax, a discounted rate of 5% has been proposed during the COVID-19 pandemic. Besides, the surcharge and penalty for property tax and motor vehicles tax have also been rationalized. The government has given relief by reducing the tax rate for various service sectors and the rates of sales tax on services for ten service sectors are being reduced including beauty parlours, fashion designers, architects, laundries and dry cleaners, supply of machinery, warehouse services, dress designers and rental of bulldozers. The government also proposed expanding the scope of the reduced rate of sales tax rate of 5 per cent on restaurants, via payments made through mobile wallets and QR scanning. The decision is made following the result of the reduced tax rate through card payment which helped in the documentation of the economy as well as providing relief to taxpayers who support documentation.

The government has proposed exemption from the Punjab Infrastructure Development Cess for all goods exempted from payment of duties and taxes for import by the federal government. Currently, a taxpayer has to apply for the said exemption to the government of Punjab after obtaining exemption from the federal government. The step is taken for ease of doing business. For maximum facilitation and to ensure that the intended relief does not cause any unintended hardship to any business, the option to charge sales tax at the standard rate of 16 per cent instead of reduced rate has been proposed.