K-P to slap fixed tax on wedding halls
The government has mandated the task force to review the FBR’s tax collection data, its performance indicators and reporting mechanisms, and identify the areas of revenue performance and potential. photo: file
Director General of the Khyber-Pakhtunkhwa Revenue Authority (KPRA), Fouzia Iqbal, convened a meeting with the Advisor to the Chief Minister on Finance, Muzzammil Aslam, at his office to deliberate on the transition of the sales tax on services from a percentage-based to a fixed regime across various sectors within the province, notably including wedding halls and beauty parlors.
The proposed strategy entails offering service providers the option to select between a fixed tax or a percentage-wise tax structure, with stringent penalties earmarked for any instances of tax evasion, mandating the default return to the standard 15 percent sales tax rate.
Under this scheme, wedding halls and beauty parlors will be stratified into distinct categories based on their scale and operational capacity, each assigned a corresponding fixed tax rate.
Furthermore, the active engagement of traders’ associations and chambers of commerce ensures a comprehensive registration process for all service providers with the KPRA, facilitating streamlined compliance measures.
In a bid to further incentivize compliance and promote digital transactions, the advisor announced a 2 percent rebate for payments made via credit cards in restaurants and hotels registered with KPRA under the 15 percent tax bracket. This initiative is driven by the overarching goal of fostering trust and enhancing convenience for both taxpayers and service providers alike.
Emphasizing the broader objective of economic documentation and stakeholder facilitation, the advisor directed KPRA to extend the fixed tax category to encompass professionals such as doctors and lawyers, concurrent with ongoing amendments to the K-P Sales Tax Act 2022. Additionally, to bolster enforcement efforts and encourage transparency, whistleblowers identifying instances of tax evasion will be rewarded with a percentage of fines collected from offending entities, underscoring the administration’s commitment to fostering a culture of compliance and accountability within the tax ecosystem.
KPRA has recorded 35 percent growth in the first nine months of the financial year 2023-24 compared to the same period of the previous year.
According to details shared by the KPRA media wing, the Authority has collected Rs30.3 billion in taxes till the end of March in the current financial year. Last year, KPRA collected Rs22.5 billion in the same period which shows 35 percent growth rate in the current fiscal year.
KPRA is mandated to collect and administer Sales Tax on Services and Infrastructure Development Cess (IDC) in the province. This year KPRA has managed to collect Rs26.7 billion from the sales tax on services and Rs3.7 billion in the IDC in nine months.
If compared with last year’s first three quarters, only Rs19.7 billion were collected from the sales tax on services while this year’s corresponding period collection stands at Rs26.7 billion which shows 34 percent growth in STS collection.
Similarly, Rs2.7 billion was collected from the IDC in nine months of the previous year while this collection is Rs3.7 billion which shows 36 per cent growth.
Published in The Express Tribune, April 19th, 2024.