A taxing affair: Finance act 2016 puts levies on cargo transport

Govt expects to generate up to Rs100 million every year from these taxes

PESHAWAR: The provincial government has imposed sales tax on inter-city buses, road cargo service providers, visa processors, consultancies and agencies with valuation services.

To impose these levies, it has inserted four new entries into Schedule-I of the K-P Finance Act, 2013 through a corresponding legislation of 2016. These were passed in the house on Wednesday.

In his budget speech, Minister for Finance Muzaffar Said maintained no new tax had been imposed for 2016-17. However, existing taxes rates had been increased. The new entry charges tax on cargo services provided by inter-city buses and other private companies have been levied for using K-P’s roads.

Visa processing services, including advisories and consultancies for migration or to send students abroad for education, had been inserted in the first schedule of the 2013 legislation. Companies providing valuation services, including those conducting competency and eligibility tests, were also made part of the new additions.

K-P Revenue Authority Operations Director Shah Nawaz Khan told The Express Tribune the services had been included in Schedule-I and now the government has to impose the relevant taxes.

“We expect to generate Rs100 million every year from the new entries,” he said.

The finance act increased the values of stamp duties and also changed the whole schedule of the Khyber-Pakhtunkhwa Motor Vehicles Taxation Act, 1958. Owing to the latter, annual rates on cars saw a rise in rates. For motorcycles, a lifetime tax has been fixed at Rs1,500. For trucks, trailers and delivery vans, annual tax rates also witnessed a hike.

However, Muzaffar added motor vehicle taxes in K-P were lower as compared to other provinces. For vehicles not exceeding 1,250 kilogrammes in loading capacity, the annual tax rate is Rs625. Similarly, vehicles with a loading capacity up to 2,030 kg have to pay Rs1,000. Those with higher capacities such as between 2,030kg and 4,060kg and 4,060kg and 6,090 kg will have to pay Rs1,025 and Rs2,200 per year, respectively.

The revised annual tax for vehicles with a loading capacity between 6,090kg and 8,120 kg is Rs2,500. The same levy jumps up to Rs5,000 where vehicles with a loading capacity between 8,120kg and 12,000kg are concerned.

At least Rs7,500 will be charged for vehicles with a maximum loading capacity between 12,000 and 16,000kg, while trucks and trailers with capacities exceeding 16,000kg will have to pay a tax fixed at Rs10,000 per annum.

For passenger vehicles, Rs500 has been imposed on rickshaws or other three-wheelers with a seating capacity for three, Rs750 for vehicles with four seats and Rs800 for six-seaters. Vehicles with more than six seats will be charged Rs225 per seat, while those forms of transport with not more than 20 seats will be charged Rs200 per seat if plying within the limits of the Municipal Corporation or Cantonment.

For private vehicles, including cars and jeeps, the tax will be Rs625 for vehicles with a seating capacity of not more than three persons. Those with three seats were categorised according to engine capacity.

For cars with more than three seats and an engine capacity of 1,000cc, a lump sum tax of Rs1,000 shall be charged at the time of registration, while cars with engines between 1000 and 1,300cc will pay Rs1,500. At least Rs2,250 will be charged for vehicles with engine sizes between Rs1,500cc and 2,500cc. The motor vehicle tax for luxury vehicles with engine power exceeding 2,500cc is Rs6,500, while tractor tax is Rs800.

Published in The Express Tribune, June 27^th, 2016.