The Punjab Revenue Authority (PRA) has announced that all withholding agents in Punjab, Pakistan, are now considered “collecting agents” for sales tax purposes. This means they are responsible for collecting sales tax on behalf of the government and depositing it into the government treasury.
This change is based on the Punjab Sales Tax on Services Act, 2012. It aims to strengthen tax collection efforts and ensure that the government receives the appropriate amount of sales tax revenue.
Key Points:
- Withholding Agents as Collecting Agents: All entities acting as withholding agents in Punjab are now required to collect sales tax and remit it to the government.
- Government Treasury Deposit: The collected tax must be deposited into the government treasury.
- Legal Basis: The change is implemented under the Punjab Sales Tax on Services Act, 2012.
This notification has significant implications for businesses and individuals involved in transactions within Punjab. It’s important to understand the new responsibilities and ensure compliance with the requirements of the Punjab Sales Tax on Services Act, 2012.
Tax Rates of Various Services in Punjab:
- Advertisement Services: All advertisement services on television, radio, and other media will be taxed at a rate of 16%.
- Franchise Services: Tax rates for franchise services vary based on the nature of the services:
- Zero percent without input tax adjustment for services related to information technology educational institutions.
- Five percent without input tax adjustment for services related to other educational institutions.
- 16 percent for all other franchise services.
- Consulting Services: Tax rates for consulting services also vary:
- Zero percent without input tax adjustment for training services related to information technology.
- 16 percent for all other consulting services, including human resource, exhibition, event management, valuation, and marketing services.
- Other Services: Other affected services include advertising agents, brokerage services, healthcare and recreation services, debt collection services, and parking services. Tax rates for these services range from 5% to 16%.
Professional Tax for in Punjab (As per Punjab Finance Act 1977 Updated)
Companies registered under the Companies Act, 2017 or under the relevant law for the time being in force will be subject to a professional tax based on their paid-up capital:
- Companies with a paid-up capital of up to Rs. 5 million will pay a tax of Rs. 10,000.
- Companies with a paid-up capital exceeding Rs. 5 million but not exceeding Rs. 50 million will pay Rs. 30,000.
- Companies with a paid-up capital exceeding Rs. 50 million but not exceeding Rs. 100 million will pay Rs. 70,000.
- Companies with a paid-up capital exceeding Rs. 100 million but not exceeding Rs. 200 million will pay Rs. 100,000.
- Companies with a paid-up capital exceeding Rs. 200 million will pay Rs. 100,000.
Persons other than companies, owning factories as defined under the Factories Act, 1932, will be subject to a professional tax based on the number of employees:
- For factories with up to 10 employees, the tax is Rs. 1,500.
- For factories with 11 to 25 employees, the tax is Rs. 5,000.
- For factories with more than 25 employees, the tax is Rs. 7,500.
Persons other than companies operating commercial establishments with ten or more employees are subject to a professional tax. The tax amount varies based on the location of the establishment:
- Commercial establishments with 10 or more employees:
- Within metropolitan and municipal corporation limits: Rs. 6,000
- Other areas: Rs. 4,000
- All other commercial establishments (excluding wholesalers and retailers): Rs. 2,000
Individuals engaged in import or export activities are subject to a professional tax based on the value of goods traded during the preceding financial year:
- Those importing or exporting goods valued between Rs. 100,000 and Rs. 1 million will pay a tax of Rs. 2,000.
- Individuals trading goods valued between Rs. 1 million and Rs. 5 million will pay a tax of Rs. 3,000.
- Those importing or exporting goods valued exceeding Rs. 5 million will pay a tax of Rs. 5,000.
Contractors, builders, and property developers who supplied goods, commodities, or services to the federal or provincial government, companies, factories, commercial establishments, autonomous or semi-autonomous organizations, or local authorities during the previous financial year are subject to a professional tax based on the value of these supplies:
- For supplies valued up to Rs. 1 million, the tax is Rs. 1,000.
- For supplies valued between Rs. 1 million and Rs. 10 million, the tax is Rs. 6,000.
- For supplies valued between Rs. 10 million and Rs. 50 million, the tax is Rs. 10,000.
- For supplies exceeding Rs. 50 million, the tax is Rs. 20,000.
Professional Tax for Various Businesses and Individuals
Individuals engaged in various professions and services are subject to a professional tax. The tax amount varies based on the profession and location:
- Medical Professionals: Medical consultants, specialists, and dental surgeons pay a tax of Rs. 5,000. Registered medical practitioners pay Rs. 4,000. Other medical practitioners, including homeopaths, hakeems, and ayurvedics, pay Rs. 3,000 within metropolitan and municipal corporation limits and Rs. 1,000 in other areas.
- Auditing Firms: Auditing firms pay a tax of Rs. 6,000 per professionally qualified person within metropolitan and municipal corporation limits, and Rs. 4,000 in other areas.
- Consultants: Management, tax, architectural, engineering, technical, and scientific consultants pay a tax of Rs. 6,000 within metropolitan and municipal corporation limits and Rs. 4,000 in other areas.
- Lawyers: Lawyers pay a professional tax of Rs. 1,000.
- Financial Services: Members of stock exchanges pay Rs. 10,000. Money changers pay Rs. 6,000 within metropolitan and municipal corporation limits and Rs. 2,000 in other areas. Motorcycle and scooter dealers pay Rs. 10,000 and Rs. 6,000 respectively, within and outside metropolitan areas. Motor vehicle dealers and real estate agents pay Rs. 20,000 and Rs. 10,000 respectively, within and outside metropolitan areas. Recruiting agents pay Rs. 20,000 and Rs. 10,000 respectively, within and outside metropolitan areas.
- Transportation: Individuals engaged in the carriage of goods and passengers by road pay Rs. 4,000 within metropolitan and municipal corporation limits and Rs. 2,000 in other areas.
- Other Services: Health clubs, gymnasiums, jewelers, departmental stores, electronic goods stores, cable operators, printing presses, and pesticide dealers pay a professional tax of Rs. 2,000.
- Tobacco Venders: Tobacco wholesalers pay a professional tax of Rs. 4,000.
- Franchisees, Authorized Dealers, and Distributors: These entities will pay a flat professional tax of Rs. 5,000.
- Property Developers, Builders, and Marketing Agents: These businesses will be subject to a professional tax of Rs. 50,000.
- Hotels, Hostels, Guest Houses, Motels, and Resorts: These establishments will pay a professional tax of Rs. 5,000.
- Restaurants, Eateries, Fast Food Points, Ice Cream Parlors, Bakeries, and Confectioneries with air conditioning: These businesses will pay a professional tax of Rs. 5,000.
- Other Professionals: Individuals engaged in professions such as medical consultants, lawyers, architects, engineers, and accountants will be subject to professional tax based on their specific category and location.
- Businesses with Significant Turnover: Businesses involved in import/export, manufacturing, and other sectors with high turnover will also be subject to professional tax based on their annual turnover.
The tax rates vary depending on the specific category and location of the business or individual.
