KP Revenue Authority reduces sales tax on 29 services

The services which fell in reduced rates include allied services, hotels and restaurants services.

PESHAWAR (Web Desk) – The Khyber Pakhtunkhwa Revenue Authority (KPRA) has significantly reduced rates of sales tax from 15 percent to merely two percent on 10 services among dozens other services as part of the tax relief package of the provincial government to promote business activities and encourage better tax compliance in the province.

The government has issued notifications to this effect by making changes in the second schedule for reducing rates of sales tax on 29 services as approved in the budget 2020-21,says a press release issued by the KPRA here on Friday.

According to notification, five services have been brought down from 15 percent slab to five percent, while six services were brought down from 15 percent rates to ten percent and eight percent. The services which fell in the reduced rates include construction and allied services, hotels and restaurants services, workshops, business support services, laboratory services, labour or man power providing services and beauty parlors.

Earlier, the construction services sector which was used to be taxed at the rate of 15 percent has now been reduced to two percent. The sales tax on services provided by hotels, restaurants, guest houses and lodges having local chains have been reduced from 15 percent to 8 eight.

While as an incentive the hotels and restaurants having Restaurant Invoice Management System (RIMS) that works properly, the rate of sales tax on services would be only five percent.

"The aim of the tax package is to be provide relief to the public and ease business in the province with encouraging tax compliance which would help in building tax culture," said Fayyaz Ali Shah, the Director General KPRA, adding tax compliance would ensure more financial resources with the government, enabling it to spend socio-economic uplift of the people.

The sales tax rates on manpower or labour supplying services, business support services, laboratory and testing services and contractual execution service providers that was 15% would now be taxed at five percent rates.

Similarly, the airports, dry ports, container terminal providers and storage or warehouses service provider that were used to be taxed at 15 percent would now pay 10 percent.

The sales tax rate for workshops operating as standalone business have been dropped down from five percent to two percent while,the rates for industrial workshops have been reduced from ten percent to five percent.

The sales tax on beauty parlors services which was eight percent has now come down to five percent and for the medium sized laundry services the sales tax rates have been reduced From eight percent to two percent. For the capital goods dealership services, equipment renting services, cargo services by railways, services of underwriters, indenting services, auctioneering services, erection and commissioning services and quality assurance services the tax rates have been reduced from 15 percent to two percent.

For the services provided by property dealers, bargain centers, car wash, Digital or IT firms, call centers and firms or individuals providing cinematographic services the sales tax rate have been brought down from five percent to two percent.