LAHORE: The Punjab government has proposed in the finance bill 2018 to significantly decrease motor vehicle tax on imported cars, increase stamp duty rates for different agreements, bring more services under the provincial sales tax net and enhance powers of the Punjab Revenue Authority (PRA) to force greater compliance with sales tax law.

The bill has suggested drastically cutting down of the tax on imported cars between engine capacity of 1,300cc and 2,500cc by 50 per cent to 80pc to prevent owners from registering their cars in Islamabad or other provinces.

The government has proposed to bring down the tax on imported cars with engine capacity exceeding 1,300cc but not exceeding 1,500cc to Rs15,000 from Rs70,000, on cars with engine capacity exceeding 1,500cc but not exceeding 2,000cc to Rs25,000 from Rs150,000 and those with engine capacity exceeding 2,000cc but not exceeding 2,500cc to Rs100,000 from Rs200,000. However, the government maintained the tax rate on the cars with engine capacity exceeding 2,500cc of Rs300,000.

The Punjab government has also proposed up to five times spike in stamp duty rates on different agreements that will generate almost Rs1 billion in tax. Last time, the stamp duty was revised in 1995-96. Increase in the stamp duty will not impact people as they are already paying to the vendors.

Furthermore, the government has proposed amendments to the sales tax law of 2012 to net new and premium insurance services such as fire insurance, goods insurance and health insurance. Courier services provided for online shopping, recovery or collection services, warehousing services and parking services will also be taxed from this fiscal year.

The bill also proposes certain procedural and technical amendments to the Punjab Sales Tax on Services Act 2012 for improving compliance with the law. The changes to the law will allow the PRA to take punitive action against those who failed to comply with the sales tax law.

Published in Dawn, October 17th, 2018