No new tax was imposed by the Punjab government in its eight-month budget on Tuesday and the whole focus has been shifted to improve collection mechanism and introduce tax reforms. Accordingly, the provincial machinery would ensure 17 percent rise in tax collection to Rs376 billion. Under the reforms agenda, the finance bill suggests that the retention time of record and recovery of short paid tax has been enhanced to eight years from earlier five years and a direct statutory backing would be provided with an existing rules relating to electronic monitoring of taxable services and enforcement actions to preclude litigation.

Also, in order to plug compliance gaps arising out of the diversities of tax on services, tariff interpretations and descriptions of a few taxable services have been modified to remove gaps and misapplications of the law. The overall objective is to broaden the tax base of Punjab Sales Tax on Services Act 2012 and maximize revenue generation in public interest.

The excise, taxation and narcotics control department has proposed amendments to the Punjab Finance Act 2016 in order to make recovery mechanism more efficient and to rationalize the rate of tax imposed on imported motor cars. As per the amendments suggested in the Act 2016, rate of tax on 1300cc but not exceeding 1500cc vehicles has been increased to Rs15000, followed by Rs25000 on vehicles exceeding 1500cc to 2000cc, Rs100,000 on 2000cc but not exceeding 2500cc and Rs300,000 on vehicles with engine capacity exceeding 2500cc.

Punjab Finance Minister Makhdoom Hashim Jawan Bakht said efforts are afoot to eradicate corruption and intricacies in the tax system for introducing simplicity to the tax process.

Copyright Business Recorder, 2018