GST slashed to 5pc for construction industryArchive
LAHORE: In order to boost construction industry in Punjab, the provincial government has slashed GST on construction services from 16 per cent to 5pc as well as merged separately charged CVT, stamp duty and registration fee on properties to facilitate customers.
The Punjab government has withdrawn exemption given in sales tax on internet services worth Rs1,500 and above packages. However, the exemption on internet packages under Rs1500, primarily being used by students, will continue as such.
The Punjab government has also abolished exemption on GST in furnishing supply contracts to bring in the tax net all companies and firms concerned.
The government was earlier giving exemption on furnishing supply contracts up to Rs50 million. However, the companies and firms involved in the furnishing supply contracts were evading taxes by splitting their bills below the ceiling of Rs50 million.
The government has also abolished the registration fee for all new business firms.
The exemptions and reduction on sales tax on various services have been introduced in the Punjab Finance Bill 2017 announced by the provincial finance minister Dr Ayesha Ghaus Pasha soon after her budget speech in the Punjab Assembly. The finance bill will come into force from July 1, this year.
With a mindset that no new taxes be imposed but widen the tax net, the Punjab government has enhanced its provincial revenue target from current fiscal’s Rs280 billion to Rs348.3bn for the next 2017-18 financial year. Under the direct taxes head, the government aims at collecting Rs230.98 billion as compared to this year’s target of Rs184.4 billion. Under non-tax revenue head, the government aims at collecting Rs117bn as compared to current fiscal’s Rs95bn.
The government has slashed 11pc GST on construction services, hoping that underreporting in the construction sector will be minimised and would bring in some Rs3bn more tax revenue.
Similarly, the government plans to save some Rs3bn by slashing sales tax on internet services.
After abolishing the ceiling of Rs50m for GST exemption, the government will now be charging sales tax at the rate of 16pc on all bills for furnishing supply contracts.
Giving the rationale of abolishing GST on internet services, the finance department officials said the government had given exemption to benefit internet users but the Internet Service Providers (ISPs) were not passing on the relief to the users.
The finance minister in her budget speech said the government had not imposed any new tax as it was more interested in widening the tax net and introducing revenue collection in a transparent and ‘irregularities-free’ manner. She said the government wanted to enhance its revenue without burdening the masses so that it could allocate more funds for the development projects.
Citing one example, the finance minister said the government during the current fiscal enhanced its income from auction of minerals from Rs3bn to Rs10bn by just streamlining its affairs and controlling the “influential mafia” in the minerals sector.
BoR for easing tax collection
The Board of Revenue has proposed merger of all taxes, duties, fees in one head count of Stamp Duty which would be issued through e-stamping system.
The merger of all taxes will ease the procedure of deposits and helpful in reconciliation process as well.
The BoR, it may be mentioned, has proposed the merger of all taxes and duties following great success of e-stamping project that eliminated the usage of counterfeit stamp papers.
Published in Dawn, June 3rd, 2017