Taxation

The Punjab government has brought as many as 16 more sectors under the ambit of sales tax on services. The newly added sectors include services provided by

 

1) software or IT-based system development consultants,

2) technical/scientific and engineering consultants,

3) other consultants,

4) services provided by tour operators (other than Hajj and Umrah),

5) manpower recruitment agents, services provided by the security agency,

6) services provided in respect of mining of minerals,

7) oil and gas including related surveys and allied activities.
8) advertising agents,

9) share transfer agents,

10) business support services,

11) services by property dealers,

12) fashion designers,

13) architects/town planners and interior decorators,

14) rent a car,

15) car/automobile dealers and

16) services provided in respect of manufacturing or processing on toll or job basis (against processing on conversion charges) have also been brought under the scope of provincial sales tax.

A notification bearing No SO (TAX)1-2/97 was issued by the Finance Department of the Punjab Government with effect from July 01, 2013 expanding the list of services on which the Punjab Revenue Authority (PRA) was collecting sales tax on services. Prior to this, the Punjab Revenue Authority (PRA) which started working with effect from July 01, 2012 was collecting sales tax from 21 categories of services.

With the addition of 16 more now the number of services to be taxed under provincial sales tax has reached to 37. The notification issued in this regard said that it would come into force with effect from July 01, 2013 and rate of the sales tax will be 16 percent.

The Punjab Excise and Taxation Department has started issuance of notices to the owners of the big houses for payment of luxury tax on houses for the FY 2013-14, official sources told Business Recorder on Tuesday. In the Finance Bill 2013-14, the Punjab government has levied a luxury tax on residential houses located in a part of rating area of Punjab Urban Immoveable Property Tax Act 1958 at the following rates.

 

(a) Residential house measuring two kanals & above but less than four kanals: Rs 0.5 million

 

(b) Residential house measuring four kanals & above but less than eight kanals Rs 1 million

 

(c) Residential house measuring eight kanals and above Rs 1.5 million.

 

The provincial government has clarified as under:

 

(1) In case of an existing house, the luxury tax shall be paid within a year commencing from the first day of July, 2013 in four equal instalments before the expiry of each of the four quarter of the year.

 

(2) Where an instalments of the luxury tax is not paid within the prescribed time, surcharge equal to two percent of the outstanding tax per month shall be paid and where surcharge is paid during a month, the surcharge shall be prorated on daily basis for the days of the last month in default.

 

(3) The tax levied under subsection (a) shall be paid on one time basis provided that where a taxable house is constructed after the commencement of this Act, the luxury tax shall be likewise paid on one time basis within one year of the completion of construction of such house.

 

(4) A residential house, measuring not exceeding four kanals owned by a widow and in which she is residing, shall be exempt from the payment of the luxury tax levied under subsection (a) Provided that where a widow owns more than one houses

 

(5) Where the luxury tax has not been levied on a house owned by a widow, the whole amount of tax shall be payable on such house by her legal heirs or any other transferee not being a widow within one year of her demise or transfer.

 

(6) In case of house liable to luxury tax under subsection (a) is registered in the name of a minor, the liability to pay the luxury tax shall be on the parents or the guardian of the minor.

 

(7) No tax shall be levied, charged or paid in case of a house which is sold or transferred after the payment of the luxury tax once due thereon.