Budget 2020-21: Rs56 billion tax relief for corona-hit businesses.

Byline: Nasir Jamal

LAHORE -- The Punjab government has given significant tax relief of Rs56 billion to the businesses hit adversely by the Covid-19 pandemic to save jobs and ensure that such enterprises continued to operate. Additionally, the tax cuts and rebates for taxpayers announced in the 2020-21 budget aim at digitising the economy, ease of doing business, documentation of certain sectors of the economy and promotion of construction and tourism industries.

At the same time, according to the finance bill, the government has decided to bring the ride-hailing services (Uber, Cream and others) into the provincial sales tax on services net through special rate of 4pc, increasing the total number of services being taxed in the province to 69.The ride-hailing services, which were categorised as Rent-a-Car service, have now been declared a separate business for the purpose of taxing it.

The bill tabled by finance minister Makhdum Hashim Jawan Bakht before the provincial assembly on Monday states that based on operational experience of the Punjab Revenue Authority (PRA), certain amendments have been proposed to further streamline the procedures under the Punjab Sales Tax on Services Act, 2012, and facilitate taxpayers. The bill states the overall objective of reducing tax rate is to ease the hardships being faced by the businesses and increase voluntary compliance without resorting to coercive measures.

'Apart from certain changes in fines, all adjustments are meant to facilitate the businesses during the prevalent coronavirus situation and take steps towards documentation of economy,' it says. Electronic invoicing initiatives are being extended to maximum number of service sectors and GST on services rates have been reduced to 5pc from 16pc for restaurants and beauty parlours on payments made through debit/credit cards.The cash payments will continue to attract 16pc tax.

Moreover, the government has proposed to reduce the rate of taxes on sectors hit by the Corona pandemic such as hotels, caterers, marriage halls etc. In order to promote the use of Information Technology and empower technology-based entrepreneurship, the rate for this sector has been reduced from 16pc to 5pc. The tax rate on manpower recruitment services has also been reduced to 5pc, specifically for the services of which the value has been fixed by Bureau of Emigration and Overseas Employment.

The stamp duties on various property transactions has been slashed to 1pc from...