Punjab Government presents Rs3.2tr tax-free budget FY23

BY Asim Shahzad

Punjab government on Wednesday presented Rs3.2 trillion tax free budget for fiscal year 2022-23. Finance Minister Awais Leghari presented the budget in a session held in Awari Hotel.

For purposes of promoting e-payment of urban immovable property tax and motor vehicles tax, a discounted rate of 5% has been proposed as introduced previously in the finance bill 2022-23.

Besides, surcharge and penalty for property tax and motor vehicles tax have also been rationalized by shifting them to the payments made during the last two quarters of the financial year.

The proposal to amend the Stamp Act, 1899 (II of 1899) aims at generating revenue from multiplication in transactions and move towards parity with rates in rural areas, the rate of Stamp Duty is proposed to be increased from the existing rate of one percent to two percent in urban areas.The amendment proposal for the Punjab Motor Vehicles Taxation Act, 1958 (XXXII of 1958) includes provisions for imposition of the tax in the Schedule to the Act ibid upon the electric vehicles proportionate to their power in kilowatts. In this regard, an equation for conversion of kilowatts into engine power in cubic centimeters (cc) has also been devised for determination of power of those electric vehicles that are not specifically included in the said provisions of the Schedule.

Despite making proposal for imposition of the said tax, it has been proposed on the analogy of the financial year 2021-22 that 95 percent exemption on such tax shall be given till 30 June 2023. This proposal, among other targets, will facilitate and promote registration of electric vehicles, in turn, leading to a considerable improvement in environment.

The legislative proposal for the Punjab Sales Tax on Services Act, 2012 (XLII of 2012) contains provisions for ending the exemption given to student internet package as such exemption has become redundant since no telecommunication service provider is providing student packages anymore while this exemption is no more beneficial for anyone; rather such exemption may help in tax evasion resulting in loss of revenue.

Further, it has been clarified that the services of real estate aggregators are included in information technology-based services while the services provided by cab aggregators are included in ride-hailing services.

For ease of doing business, the limit of input tax adjustment is proposed to be increased from eighty percent to ninety percent of the output tax.

A number of provisions regarding limit of input tax adjustment, penalties and time limitation are also part of the legislative proposal seeking amendments in the Act XLII of 2012.In order to achieve a more progressive taxation, enhanced rates for Tax on Luxury Houses have been introduced for houses above a certain size with the completion of construction date from 01.07.2022. To achieve the said purpose, an appropriate amendment of the Punjab Finance Act, 2014 has been included.