Punjab government is all set to add more ‘services’ into the tax net, in an attempt to fulfil a long standing dream of the province’s finance gurus to generate its own revenues, Pakistan Today has learnt.
Land developers, architects and fashion designers are among those whose services will be added to the tax net.
The Punjab revenue authority was formed to collect general sales tax (GST) on services after the responsibility was delegated to provinces.
Initially, there were 14 services which were taxed, with the government recently adding seven more to the list by bringing in services provided by marriage halls, hotels, guest houses, mobile services, consultancy, advertising on cable and television amongst others. This resulted in increasing revenue by 20 percent in the outgoing financial year.
Sources privy to the development said revenue details of GST on services is Rs 37 billion with Rs 27 billion coming from the telecom sector alone. The board of revenue collects Rs 33 billion and Rs 4.5 billion is collected via property tax, while excise and taxation earns Rs 17 billion for the government.
Sources further revealed that the recent move to bring in services of land developers, architects and fashion designers into the tax bracket along with other services has been taken to achieve 20 percent or more growth rate in revenues for the upcoming year.
With a strong tilt towards the Centre, more than 80 percent of provincial finances come from Islamabad, which collects taxes on behalf of provinces and then distributes it per the NFC award. The recent decision of handing over the power to collect GST on services was made to enhance the capacity of provinces to generate revenue on their own.
However, the move might come down hard on many of these sectors that remained untaxed for the most part, especially fashion designers, who have seen a boom in the local industry during the last decade with many local designer brands appearing on the market. The same holds true for architects who have witnessed a considerable boom in the last decade owing to the enormously growing real estate market.
Overall, things do not appear very bright with the clerks already on roads protesting against no raise in their salaries by the federal government in the recently announced budget.
Ibrahim, a Lahore based architect, talking to Pakistan Today said, “Broad-based tax for all architects will be hard on them, especially for the struggling ones. The government should set a criterion for taxing only those working with big corporations or real estate magnates instead of targeting the small fish”. Those earning too much should be the first ones to pay tax, he said, adding that those earning less should be targeted much later.
Punjab to bring additional services into tax net
