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LAHORE: The Lahore Development Authority (LDA) has started deducting the Punjab Sales Tax at the rate of five per cent on all services related payments after it received a notice from the Punjab Revenue Authority (PRA) to deposit over Rs6 billion with the provincial exchequer.

The PRA had assessed Rs6.107 billion tax on the payments the LDA made in the last two fiscal years -- 2014-15 and 2015-16 -- to several contractors and vendors. The PST as assessed by the PRA included a penalty of Rs293.842 million for not making the payment in time.

Officials say the LDA has also filed a petition before the PRA’s appellate authority besides challenging it in the high court. Services of a legal firm have also been hired to contest the Rs6.107 billion PST payment notice at the aforementioned forums.

“We have started deducting five per cent PST on the entire payments related to services,” says Mr Ali Shahzad, LDA’s Director (Finance). “But side by side, we have also filed an appeal before the PRA’s appellate authority besides challenging this in the high court after our legal experts said the tax had been wrongly assessed,” he told Dawn. “However to settle the issue, we have deposited Rs100 million PST initially,” he told Dawn on Friday.

According to the minutes of a recent LDA’s governing body meeting, the authority claimed to be a pioneer among the government departments to get Free Tax Number (FTN) from the Federal Board of Revenue (FBR). “The LDA is pioneer among government departments to get the FTN from the FBR. The LDA is Withholding Agent of the FBR and PRA and e-filing the statements as prescribed by both the authorities,” read the minutes.

The minutes mentioned that a show-cause notice vide No PRA/Public Sector/3150 dated January 9, this year was served to LDA by the PRA wherein they calculated PST amount of over Rs5.876 million for 2014-15 and 2015-16 from the figures taken from the LDA’s budget. Later on, a final hearing notice was issued regarding the subject matter vide No PRA/Public Sector/2017/2526 dated February 23, 2017 that was duly attended by M/S Zafar & Associates-LLP. However, PRA’s Additional Commissioner passed an assessment order vide No 21/2017 that was received in the LDA DG office on May 22, wherein the PST to the tune of Rs5.876 billion was assessed along with the penalty of Rs293.842 million.

Meanwhile, the meeting discussed the possibility for the LDA to engage the services of an outside tax consultant on a regular basis to deal with tax matters concerning federal and provincial tax agencies. The Authority, according to minutes, further directed the Director (Finance) to fulfill all the codal formalities in this regard.

Published in Dawn, September 2nd, 2017