The Khyber-Pakhtunkhwa (K-P) government has proposed to reduce and rationalize sales tax on 31 different services in the province.
As per a press statement by Khyber-Pakhtunkhwa Revenue Authority (KPRA), the sales tax on 10 different services have been brought down to only one percent for the fiscal year 2021-22.
Last year, the K-P government had reduced sales tax on 29 different services as a tax relief package to the businesses, and this year the sales tax rates on different sectors have been reduced and rationalized mostly on the requests of the taxpayers’ community.
To provide relief to the business community, Chief Minister Mahmood Khan issued special directives to the KPRA for reducing tax rates for certain sectors associated with services. The changes in the sales tax on services have been proposed in the Finance Act 2021 which will be tabled to the provincial assembly in the ongoing budget session.
According to details, the sectors inserted in the one percent tax slab include print media advertisements, property dealers, agriculture cold storage and warehouse, industrial workshops, car wash services, cinematographic services, quality assurance and inspection services, auctioneers, installation and commissioning services and under writer services.
To promote tourism in the province, the government has specially reduced sales tax on hotels and restaurants located in Naran and Kaghan areas of the province from eight percent to only five percent.
Similarly, services relating to mines and minerals including government, royalties, licenses that were earlier taxed at 15 percent have been decreased to only two percent. Agriculture-related services that were covered under different tax slabs have been brought down to single two percent. Sales tax on services provided by clubs and sales tax on local standalone and local chains of hotels have been reduced from 15 to eight percent.
Tax rates on few services that were reduced in the year 2020-21 have been rationalized and brought back to standard rates on the request of the taxpayers from the corporate sector because their backward and forward business linkage are fully documented and they need normal input tax adjustments not at their end but also for their customers from business circles.
Published in The Express Tribune, June 20h, 2021.