Date: 12/1/2016
LAHORE: The Punjab government on Monday notified reduction of six to 14 per cent in rate of sales tax on services for 11 undocumented sectors that had been resisting the 16pc levy in the last one and a half years or so.
The reduction aiming at ensuring voluntary compliance has been announced in majority of services concerning small businesses brought to the tax net for the first time in fiscal 2014-15 on the recommendation of the Punjab Revenue Authority under Section 10 of the Punjab Sales Tax on Services Act 2012.
According to the first notification issued by the finance department, services provided by laundries and dry cleaners; services provided in specified fields such as healthcare, gyms and physical fitness; hair-cutting, hair-dyeing and shaving saloons located outside the precincts of a hotel, motel, guest house, club, air-conditioned beauty centre/parlour, AC shopping plaza/mall; property dealers and construction service providers who undertake projects with an aggregate value (excluding actual and documented cost of land) not exceeding Rs50 million in a financial year shall be charged, levied and collected at 5pc rate with being applicable only to stand-alone service-providers opting for the scheme.
The services provided by automobile dealers and auto workshops and by workshops for electric or electronic equipments or appliances (for domestic use only) will also be charged, levied and collected at 5pc with being applicable only to non-authorised dealers opting for the scheme and non-authorised and stand-alone service providers opting for the scheme respectively.
According to the second notification, the franchise service will be charged, levied and collected at 10pc rate; services provided by tour operators and travel agents and accountants (including practicing chartered or practicing cost accountants), auditors, actuaries, tax consultants (by whatever named called), practicing company secretaries, receiver, liquidators, auctioneers and corporate law consultants, whether individual or otherwise at 5pc; while services provided to the textile, leather, carpet, surgical and sports goods sectors in respect of manufacturing or processing on toll or job basis (against processing on conversion charges) at 2pc.
PRA enforcement and audit member Raza Munawar told a gathering of representatives of 11 sectors and journalists that the authority examined the demand of the associations and advised the government that a reduced rate scheme (without any input adjustment) might be viable for improving compliance in otherwise unregulated sectors.
He said the PRA identified 12,127 businesses belonging to 11 service sectors from data made available through FBR websites and district-wise non-intrusive surveys.
He said the reduced rate scheme shall be time-bound and would remain operative only for a transitional period of one year with further possible extension till the market generally becomes acclimatised and responsive enough to discharge obligations under standard tax regime.
Asked if the downward revision would adversely impact the Rs72 billion annual target, the PRA member said relief measures were always optimistic and not pessimistic and the impression that such steps would reduce collection was totally wrong.
Local sales are likely to reach 31.5m tonnes, up 11.4pc year-on-year while exports are expected to decline by 28pc to 5.2m tonnes, he added.
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