New obstacles in the path to tax evasion

Decision to withdraw property and tariff tax discounts offered during last year’s economic shutdown

LAHORE:

The Excise Taxation and Narcotics Control Department has acquired the cabinet committee’s approval to reduce the difference in personal property and rental property tax tariff from one and five to one and three, which is expected to help curb evasion of property taxes.

The department, in the same vein has also approved new measures for levying tax on plots in private housing societies in major cities, including Lahore.

Moreover, in view of the gradual normalization of economic activities, the government has further deiced to withdraw additional concessions in the form of property and token tax, previously issued to provide relief to public affected by the coronavirus lockdowns of last year. Yet however, it is to be noted that five percent discount on property tax and ten percent discount on token tax will still remain.

Following talks on the decision to merge the Narcotics Control Wing with the Excise and Taxation Department in near future, the department has once again started considering sending a summary to the government for creation of new posts for setting up of excise stations in four cities; including the post of Additional Director General of Excise and Narcotics Control.

Per sources, the difference of one and five in the rate of tax tariff on personal use and rented properties had allowed for annual tax evasions worth millions of rupees. This has primarily been the case for commercial plazas where rented shops would often be documented for personal use.

In this regard, the Excise and Taxation Department has recommended the Resource Mobilisation Committee to reduce the difference in tax tariff to one and two, but the committee could only approve the difference of one and three. However, for vacant plots in private housing societies, it has been decided to bind the concerned societies for tax collection.

During the coronavirus-induced lockdowns of last year, the discount on property tax payments was increased from five percent to ten percent and on token tax payments from ten percent to twenty percent. The excise department had recommended maintaining this concession in the new financial year as well.

However, the majority of the committee members have now come to the consensus that the current economic turmoil is not of the same intensity as last year, while a return to normal is also on the cusp. “In which case, it would be appropriate to remove the additional discount and maintain the usual discount,” the committee unanimously proposed.

Speaking on conditions of anonymity, an excise department source also shared that a summary has been sent to the government to make the collection of token tax conditional on the clearance of e-challan issued for violation of traffic rules

. “While Punjab Excise will give access to Sindh Excise’s motor vehicle data to Punjab Safe City through its computer system, so that action can be taken against vehicles with Sindh number plates violating traffic rules in the cities of Punjab. Furthermore, dropboxes of all cities will be set up to avoid mistakes while typing the residential address in the excise software,” the source informed The Express Tribune.

Published in The Express Tribune, May 5^th, 2021.