Owners of commercial properties across Punjab appear to be on the frontline in the underpayment of taxes. Department insiders believe, most of them manipulate details to get away with tax payments.
According to details available with The Express Tribune, owners of the commercial property appear to be dodging the tax net by manipulating details about the use of commercial properties.
“On paper, the owners continue to show they are running their businesses in the commercial properties. This allows them to pay lower taxes.” claimed an official at the Excise and Taxation department, who was speaking on the condition of anonymity.
As per tax laws, owners pay significantly lower taxes for commercial property, shop, or building, in their personal use. Whereas, the tax rate increases by five times for rented properties. “By showing that the property is under the owner’s use, these individuals evade taxes,” the official added. Tax evasion, he said, does not occur without the support department insiders.
Tax experts believe the provincial government can increase its revenue figures by Rs. 1 billion annually by ensuring all property owners pay taxes as per the law.
When contacted, Director-General Excise and Taxation, Chaudhry Masoodul Haq said: “We are conducting a detailed survey to curb tax evasion in the province.”
“The Excise and Taxation teams will conduct surprise visits at all commercial centres to check documents and details related to ownership,” Haq cautioned.
In a stern warning to those who are dodging the department, Haq said, “Strict action will be initiated against those who commit forgery or try to misguide the department.”
A recent survey of Hafeez Centre, a major commercial hub in the provincial capital, has helped the department increase the revenue collection by Rs.60 million.
During an unannounced visit to the Hafeez Centre, former DG Excise and Taxation, Zahid Hussain caught a number of commercial shop owners, who were paying less in taxes even while they had rented the property. Hussain’s surprise raid exposed a number of excise and taxation officials who were helping the owners dodge the tax net. Tax collection officers, another source at the department, confirmed, have colluded with the owners.
Interestingly, the provincial capital has witnessed a dramatic increase in commercial centres over the past 15 years. This increase, the officer, who was speaking on the condition on anonymity, said has not translated in a direct and equal increase in tax collection figures.
According to details provided by the department, 60-70% of the provincial taxes come from commercial properties. The remaining is generated through residential properties.
Published in The Express Tribune, July 21st, 2020.
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