LAHORE: The Punjab government has proposed measures in the budget for 2014-15 to revamp its tax administration to curb tax evasion and raise collection through imposition of new levies, rationalise the existing taxes and initiating schemes to reward taxpayers in the province.

It is targeting tax revenue of Rs164 billion for next fiscal year, up from original estimate of Rs126bn for the outgoing fiscal year. The additional taxation measures are expected to yield Rs16 to Rs18bn.

The focus of the tax reforms introduced in Punjab Finance Bill 2014-15 is to target big and luxury house and car owners, expanding the number of services to extend the scope and enhance collection of the provincial sales tax on services and raising stamp duty rate on transfer of immovable property.

The actions proposed in the bill are expected to help the government broaden the very narrow base of taxes and increase its revenues for deve­­­­­­lo­­­­pment.

The bill proposes to impose Rs250,000 per kanal up to a maximum of Rs2m on two kanal or above houses with covered area of more than 6,000 sq.ft. in Lahore including Walton and Cantonment boards and Rs300,000 per kanal up to a maximum Rs3.6m on eight kanal or above houses with covered area more than 12000 sq.ft.

In the rating areas of the divisional headquarters, districts and all the cantonments in the districts of divisional headquarters, Rs200,000 per kanal up to a maximum Rs1.6m on two kanal houses or above with covered area more than 6,000 sq.ft. and Rs250,000 per kanal up to a maximum Rs3m on eight kanal or above houses with the covered area more than 12,000 sq.ft.

In remaining rating areas and cantonments the proposed tax rate is Rs150,000 per kanal subject to a maximum of Rs1.2m on two kanal or above houses with covered areas of 6,000 sq.ft. and Rs200,000 per kanal subject to a maximum of Rs2.4m on eight kanals or above with the covered area of more than 12000 sq.ft.

The government has proposed amendment in Motor Vehicles Taxation Act with the objective to bring the luxury imported vehicles in the tax net. Under the proposed amendment, the government has imposed Rs20,000 annual tax on the imported vehicle with engine power of 1590cc but not exceeding 1990cc, Rs25,000 with engine power exceeding 1990cc but not exceeding 2990cc and Rs35,000 with engine power exceeding 2990cc. The tax is imposed on a vehicle which is manufactured abroad within last five years prior to the tax year while the imported vehicle older than five year shall be liable to annual tax as par existing rates.

Similarly, it has proposed to double the annual tax rate for the vehicles with engine power 1300cc and above.

Other than this the government has proposed to increase from 2pc to 3pc payment of stamp duty on transfer of rights in immoveable properties while reducing the registration fee from existing 1pc to Rs500 only or Rs1,000 only depending upon the value of the property.

The Punjab government has added some more service by amending the Punjab Sales tax on Service Act 2012. Under the amendment, specialized workshops, repair and maintenance, indenting/brokerage, call centres, lab services (other than pathological and diagnostic testing patients), physical fitness services, laundry and dry cleaning services, cable TV, TV/Radio program production and print media advertisements (reduced rate of 5 per cent) are the services included in the GST on services.

Published in Dawn, June 14th, 2014