RAWALPINDI: The controversy between the Punjab government and the Rawalpindi Cantonment Board (RCB) over the collection of professional tax has become a blessing for traders as they have stopped paying the tax till the settlement of the issue.

The professional tax was earlier being collected by the RCB. However, a couple of years back the Punjab excise and taxation department issued notices to the traders in the cantonment areas to pay the tax to it.

The traders approached the station commander to get the issue resolved with the department.

The Cantonment Traders Association then circulated a letter among its members in Saddar and other commercial areas not to pay the professional tax till the resolution of the dispute.

“Traders are confused to whom they should pay the tax. They cannot pay to both the RCB and the Punjab government,” said Zafar Qadri, the president of the association, while talking to Dawn.

He admitted that the business community had stopped paying the tax.

He said professional tax had wrongly been levied on the businessmen. “The tax should be levied on those who get licences for the establishment of restaurant, general store, pharmacy. The traders dealing in books, garments, electronic items should be exempted from this tax.”

He said the rate of the professional tax fixed by the RCB was Rs1,000 to Rs3,000 and that by the Punjab government over Rs10,000 per shop.

In return, the provincial government was not giving any facility to the traders as the civic affairs in the area were managed by the RCB which is under the federal government.

RCB Cantonment Executive Officer Fahim Zafar Khan told Dawn that a couple of days back the traders discussed the issue with him.

After the meeting, a letter was sent to the excise and taxation department asking it not to collect the tax within the limits of the cantonment areas. Mr Khan said the taxation department had not yet replied to the letter.

“The excise and taxation department can neither collect the professional tax in the cantonment areas nor can take action against the traders,” he said.

“The practice of the taxation department is a violation of the federal government notification issued on December 30, 1982, and another notification of October 15, 2012, allowing the cantonment boards to collect the professional tax.”

He said due to the illegal practice of the taxation department, the RCB was facing financial loss. “We had set a target to collect Rs3.5 million under the professional tax in the current fiscal year but so far have managed to collect only Rs1 million,” he said.

When contacted, Excise and Taxation Director Rao Shakilur Rehman refused to comment on the subject.

However, a senior official of the taxation department told Dawn that the collection of professional tax all over the province was the responsibility of the department.

“All the cantonment areas were included in the tax limits and the business community in Lahore and other areas are paying it regularly.”

He said the issue surfaced in the garrison city about two years back, adding the department was consulting its legal experts.He said the tax was levied on companies registered under Companies Ordinance 1984, Factories Act 1932.

He said the minimum Rs200 per unit was charged and maximum tax was Rs100,000.