Cut in sales tax rates hailed as business-friendly step

PESHAWAR: The Khyber Pakhtunkhwa government despite the coronavirus challenge proposed the cut in rates of Sales Tax on 31 different services which will create the concept of Tax Dosti in KP with the business sector, said an expert on Sunday.

“The sectors inserted in the 1 per cent 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 Underwriter services,” said Muhammad Umair Zeb, a tax expert while taking part in an online session.

The government has especially reduced Sales Tax on hotels and restaurants located in Naran and Kaghan and other tourism areas of the province from 8 per cent to 5 per cent, which is bound to promote tourism in the province.

Muhammad Umair Zeb said services relating to mines and minerals including government, royalties, licenses that were earlier taxed at 15 per cent rate had been decreased to only 2 per cent.

He pointed out that agriculture-related services that were covered under different tax slabs have been brought down to a single slab of 2 per cent.

Besides, Sales Tax on services provided by clubs and sales tax on local standalone and local chains of hotels have been reduced from 15 per cent to 8 per cent.

The expert said the 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 were fully documented and they needed normal input tax adjustments not at their end but also for their customers from business circles.

He welcomed KP Minister Finance Taimur Saleem Khan Khagra statement wherein he had stated that last year the incumbent government had given a tax relief package in the budget and this year more sectors had been proposed to be included in reduced tax slabs with minimal rates.

Umair Zeb believed that the measure to decrease the rates of Sales Tax KP by the Khyber Pakhtunkhwa Revenue Authority (KPRA) would show better revenue generation on the one hand and provided relief to the business sector which was facing less business activity for the obvious reasons during the pandemic.