In a recent step taken by the provincial government, the ride-hailing services in Punjab have been taken under the sales tax net, following the approval of the 2020 Finance Bill that was chaired by provincial Finance Minister Makhdoom Hashim Jawan Bakht.
Punjab Govt Cuts Sales Tax on Ride-Hailing Services
Earlier to the said development, the ride-hailing services were working under the ‘rent-a-car’ tax category, whereas they were likely to pay 16% tax. Whereby now, under the Provincial Sales tax on Service act 2012, the ride-hailing services are likely to pay 4% tax, which is much less than what they had to spend previously.
Moreover, it has been noted that the Punjab government also lessened tax percentages on over 20 service-based companies, while holding back from imposing any new tax in the upcoming fiscal year.
According to the reports, the tax rates have been cut significantly for the service-based firms, going from 16% to 5% or in the case of few businesses, zero per cent for the upcoming fiscal year.
The government has adopted this strategy intending to encourage the businesses to get into a higher gear and expand their activities. The government anticipates that this is likely to improve the revenue stream, as well as enhance the economic activities in Punjab.
The COVID-19 pandemic has thrown several businesses far off the track because of the enforcement of strict lockdowns from the authorities to curb the early spread. However, it seems that the wheels are spinning in the right direction, with the lockdowns having been eased across the whole country, and with Punjab government coming forward to encourage the businesses to better themselves by providing tax relaxations.