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Thursday, July 7, 2022
HomeNationalPunjab govt proposes increase in tax on luxury houses

Punjab govt proposes increase in tax on luxury houses

The Punjab government on Wednesday presented the finance bill during the “budget session” held at Aiwan-e-Iqbal in which no new tax under the sales tax on services was proposed for the fiscal year 2022-23.

However, it proposed an increase in stamp duty from one to two per cent in urban areas.

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The government is aimed at creating a financial capacity of over Rs20 billion through a tax reshuffle. Under the Punjab Finance Act 2014, the government has proposed different rates for different cities while it has increased the tax rate on luxury houses after eight years.

According to the act, it was proposed to increase the tax on luxury houses depending on the construction area. In the case of 6,000 square feet construction within a two-Kanal area, including in Lahore and the cantonment area in the city, it was proposed to levy Rs300,000 per Kanal luxury house tax. In Lahore, it was proposed to levy a maximum tax of Rs2.5 million on houses ranging between two Kanals and eight Kanals. In the case of 12,000 square feet construction in an eight-Kanal house or more in Lahore, it was proposed to levy a tax of Rs400,000 per Kanal.

It was also proposed to levy a tax of Rs4 million on an eight-Kanal house or more in Lahore.

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Meanwhile, it was proposed to amend the Punjab Motor Vehicles Taxation Act, 1958, to impose a tax on electric vehicles proportionate to their power in kilowatts. In this regard, an equation for the conversion of kilowatts into engine power in cubic centimetres (cc) has also been devised for the determination of the power of those electric vehicles that are not specifically included in the said provisions of the act.

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

The legislative proposal contains provisions for ending the exemption given to student internet packages 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 the 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 80 to 90  per cent of the output tax. A number of provisions regarding the limit of input tax adjustment, penalties and time limitation are also part of the legislative proposal seeking amendments in Act XLII of 2012. For purposes of promoting e-payment of urban immovable property tax and motor vehicles tax, a discounted rate of five per cent has been proposed as introduced previously. Besides, surcharges and penalties 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.

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