K-P increases tax on people earning over Rs20,000

Also imposes tax on educational institutions, hospitals and fitness centres

KARACHI: The government of Khyber-Pakhtunkhwa (K-P) has increased income tax on people earning more than Rs20,000 a month and on government employees of grade seven and above.

Besides, it has also slapped taxes on educational institutions, hospitals and fitness centres in the private sector, agricultural land and advertisements.

The new taxes would come into effect from July 1, 2019, according to the provincial Finance Bill 2019.

The provincial government has levied new taxes and revised tax rates for several sectors in order to enhance the number of taxpayers and increase tax collection by 54% to Rs53.4 billion in next fiscal year 2019-20, according to budget documents.

“All persons engaged in any profession, trade or employment, whose income is higher than Rs20,000 per month but less than Rs30,000, would be liable to pay Rs1,000,” the documents read.

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“People earning over Rs30,000 per month but less than Rs50,000 would pay Rs1,200 in tax and people earning in the bracket of Rs50,000-100,000 would pay Rs1,500 in tax.”

People whose earnings fall in the Rs100,000-200,000 bracket would pay Rs2,000 in tax. Similarly, people earning in the range of Rs200,000-500,000 would be liable to pay Rs3,000 in tax and those earning over Rs500,000 per month would be required to pay Rs5,000 in tax, the bill said.

Federal and provincial government employees of grade 7-22 would pay provincial income tax in the range of Rs1,000-3,000 in six different slabs.

Taxes on hospitals, institutions

Private clinics and hospitals having up to 10 employees would pay Rs15,000 in service tax.

Similarly, private clinics and hospitals having more than 10 employees but not more than 50 would pay Rs60,000 and those having over 50 employees would pay Rs100,000 in tax. Doctors and specialists practicing in Peshawar would pay tax in the range of Rs40,000-80,000 depending on whether they are practicing at divisional headquarters, district headquarters or elsewhere.

Non-specialists including medical practitioners, hakeems and homeopaths would be taxed at a fixed rate of Rs30,000 while dentists certified by the Pakistan Medical and Dental Council (PMDC) would pay Rs15,000 in tax.

Health fitness centres and gymnasiums have been taxed in the range of Rs1,500-3,000.

A fixed tax of Rs100,000 was slapped on private medical and law colleges.

Private engineering institutes having degree programmes were taxed Rs100,000 while private business educational institutes having up to 100 students would be liable to pay Rs80,000 and those having more than 100 students would pay Rs100,000.

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https://i1.tribune.com.pk/story/1995426/1-rs900b-surplus-budget-unveiled-k-p/Other private educational institutions would pay tax in the range of Rs80,000 to Rs100,000 depending on their tuition fee, number of professional and technical staff.

Penalty, imprisonment for bankers

The provincial government has announced penalty of up to Rs100,000 or 5%, whichever is higher, on bank and imprisonment of up to one year with or without penalty for the banker who fails to deposit or delay the deposit of collected withholding tax (WHT) with the provincial tax collection authority.

The bank and banker may be brought to justice in case they fail to attach or delay the attachment of bank accounts of a person from whom tax is sought to be recovered.

Tax on agricultural land

Total cultivated land, computed as irrigated land, by treating one irrigated acre as equal to two un-irrigated acres exceeding one acre but not exceeding 12.5 acres would be taxed Rs225. This will exclude agricultural land for orchards.

A tax of Rs240 has been imposed on land area exceeding 12.5 acres, excluding orchards. Orchards would be taxed Rs900.

Tax on advertisements

Advertisements on TV including cable TV networks, radio, CCTV and other similar mediums would be taxed 10% without any input adjustment.

In some cases, the tax on advertisements may be charged at the reduced rate of 5% or may be exempted.

Telecommunications and similar allied or ancillary services including 3G/4G/5G/LTE, SMS and MMS would be taxed Rs19.5. Buildings and land used for installation of mobile phone towers will be taxed in the range of Rs20,000-40,000 depending on location of the building.

Taxes on cabs, e-commerce slashed

“We are reducing the tax rate on ride-hailing services to 2% and on online marketplace services to 5% because we believe that these will go a long way towards job creation for the youth,” according to the budget documents.

The government has reduced the tax rate to below 15% for 28 out of the 58 taxable services compared to nine at present. These include restaurants, wedding halls, electronic media, property dealers, automobile dealers and rent-a-car business. 

Published in The Express Tribune, June 20^th, 2019.

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