Exemption from Sales Tax on certain Services

The Government of Punjab (GOPb) has announced exemption from sales tax during the period of COVID-19 outbreak for nearly 40 service sectors.

In this regard, Notification No.SO (TAX)1-110/2020(COVID-19) dated 2’ April’ 2020 has been issued by the Finance Department of GOPb whereby Punjab sales tax applicable on certain services has been reduced to zero percent (0%) without input tax adjustment. The 0% sales tax rate for such services is applicable up to 30’ June’ 2020 only. Sales tax rates shall revert to the normal rates, as prevailing before issuance of this Notification from 1’ July’ 2020. The changes in the rates of the sales tax for relevant services are presented in the given Annex-A Table.

Exemption from Punjab Infrastructure Development Cess

Government of Punjab has also exempted import of all goods from PIDC levied under Punjab Infrastructure Development Cess Act, 2015 till 30’ June’ 2020. In this regard, Punjab Revenue Authority has issued notification No.PRA/Order.06/2019/IDC/1538 on 2’ April’ 2020.

Professional Tax & Property Tax

Government of Punjab has also announced to waive professional tax and property tax for a period of three months ending 30’ June’ 2020.

Filing of Appeals

Due to Covid-19 outbreak, the Punjab Revenue Authority has issued circular dated 25’ March’ 2020 that taxpayers can file their appeals electronically through emails at commissionerappealspra@gmail.com.

If you require our assistance in understanding the specific implications of this Alert to your business, please feel free to contact us.

Muzammal Rasheed
Chief Executive / Partner
muzammalr@enfoque.com.pk

 

Laeeq Siddique
Partner
laeeqs@enfoque.com.pk

 

Amendment in Second Schedule to the Punjab Sales Tax on Services Act, 2020

*S.No. Description Classification, if applicable

 

Existing Rate of Tax Updated Rate of Tax
1. Services provided by hotels, motels, guest houses 9801.1000 16% (i) 0% without input tax adjustment for non-corporate, non-franchise, non-chain businesses; and

(ii) 16%  for others

marriage halls and lawns (by whatever name called) including pandal and shamiana services 9801.3000 16% 0% without input tax adjustment
catering services (including all ancillary/allied services such as floral or other decoration, furnishing of space whether or not involving rental of equipment and accessories) 9801.5000 16% 0% without input tax adjustment
clubs including race clubs and their membership services including services, facilities or advantages, for a subscription or any other amount, to their members 9801.4000 16% 16% percent
7. Services provided in respect of insurance to a policy holder by an insurer, including a re-insurer for:

(a) fire insurance;

(b) goods insurance;

(c) health insurance;

(d) life insurance;

(e) marine insurance;

(f) theft insurance; and

(g) any other insurance.

EXCLUDING

(a) marine insurance for export; and

(b) crop insurance.

98.13 16% of the gross

premium paid

(i) 0% without input tax adjustment for health insurance and life insurance; and

 

(ii) 16% of gross premium paid, for others.

14. Construction services and services provided by contractors of building (including water supply, gas supply and sanitary works), roads and bridges, electrical and mechanical works (including air conditioning), horticultural works, multidiscipline works (including turnkey projects) and similar other works but:

 

EXCLUDING:

(i) where the tax is otherwise paid by registered persons as property developers, builders or promoters for building construction; or

(ii) where the construction work is funded under an agreement of foreign grant-in-aid or involves construction of consular buildings; or

(iii) residential construction projects where the covered area does not exceed 10,000 square feet for a house and 20,000 square feet for an apartment except where construction services are provided to construct more than one house or more than one apartment building.

 

“Explanation- Notwithstanding the rate of 5% fixed in column 4, the following further reduced rates shall be applicable:

 

(a) one per cent for all services specified at S.No.14 without input tax credit or adjustment to the extent of Government civil works including those of cantonment boards involved in the ongoing development schemes and projects launched during Financial Year 2016-17 and funded under the Annual Development Plan of the Punjab Government or funded through foreign loans where the negotiations were finalized after 1st of July 2016 or funded under Public Sector Development Program of the Federal Government or funded by the Cantonment Boards; and

 

(b) zero per cent for all services specified at S.No.14 without input tax credit/adjustment to the extent of Government civil works including those of cantonment boards involved in the ongoing development schemes and projects launched prior to Financial Year 2016-17 and funded under the Annual Development Plan of the Punjab Government or funded through foreign loans where the negotiations were finalized as on 1st of July 2016 or funded under Public Sector Development Program of the Federal Government or funded by Cantonment Boards.”.

9824.0000

and

9814.2000

5% without input tax credit / adjustment in respect of Government civil works and sixteen percent with input tax credit / adjustment for others 0% without input tax adjustment.
18. Services provided for personal care by beauty parlors, salons, clinics, sliming clinics, spas (including saunas, Turkish baths and Jacuzzi) and similar other establishments.

 

EXCLUDING:

Services provided in a parlour, salon or clinic where the facility of air-conditioning is not installed or is not available in the premises on any day of the financial year.

9810.0000

9848.0000

9847.0000

9821.4000

and

9821.5000

And

9815.7000

16% 0% without input tax adjustment.
22. Information technology-enabled or information technology based services including software development, software customization, software maintenance, system support, system assembly, system integration, system designing and architecture, system analysis, system development, system operation, system maintenance, system upgradation and modification, data warehousing or management, data entry operations, data migration or transfer, system security or protection, web designing, web development, web hosting, network designing, services relating to enterprise resource or management planning (including marketing of products), development and sale of smart phone applications or games, graphics designing, medical transcription, remote monitoring, telemedicine, insurance claim processing, online retrieval and database access or retrieval service. 9815.6000

and

respective

headings

16% (i) 0% without input tax adjustment for services provided by digital platforms; and

 

(ii) 16% for others.

24. Services provided by other consultants (by whatever name called or treated, whether as

consultant or otherwise) including human resource and personnel development services, exhibition or convention services including provision of space, equipment, accessories and other allied services, event management services (whole range and variety of their services regardless of separate or individual classification thereof), valuation services, evaluation services (including competency and eligibility testing services), certification, verification and equivalence services, market research services, marketing or sales services (including marketing agencies and on line marketing or sales services), surveyors services, training or coaching services (other than general education services) and credit rating services.

9815.9000

9832.0000

9827.0000

9818.3000

9818.2000

9818.9300

9852.0000

9859.0000

9825.0000,

9819.5000,

9849.0000,

9818.9000,

9853.0000,

9856.0000

and

respective

headings

16% 0% without input tax adjustment.
25. Services provided by tour operators and travel agents including all their allied services or facilities (other than Hajj and Umrah). 9805.5100

9805.5000

9801.9000

16% 0% without input tax adjustment.
32. Services provided by property dealers and realtors 9806.2000

9844.0000

16% 0% without input tax adjustment.
35. Services provided in respect of rent-a-car (including renting of all categories of vehicles meant for transportation of persons) 9813.3000

and

respective

headings

16% 0% without input tax adjustment.
36. Services provided by car/ automobile dealers. 9806.3000

and

9845.0000

16% 0% without input tax adjustment.
43. Services provided in specified fields such as health care, gym, physical fitness, indoor sports, games, amusement parks, arcades and other recreation facilities, and body or sauna massage etc. 9821.1000

and

9821.2000

9821.4000

16% 0% without input tax adjustment.
44. Services provided by laundries and dry cleaners. 9811.0000 16% 0% without input tax adjustment.
45. Services provided by cable TV operators. 9819.9000 16% 0% without input tax adjustment.
66. Services in respect of treatment of textile, leather but not limited to dyeing services, edging and cutting, cloth treating, water proofing, embroidery, engraving, fabric bleaching, knitting, leather staining, leather working, preshrinking, color separation services, pattern printing and shoe making services. Respective

headings

16% 0% without input tax adjustment.
67. Apartment house management, real estate management and services of rent collection Respective

Headings

16% 0% without input tax adjustment.
68. (i) Medical consultation / visit fee exceeding Rs. 1,500 per consultation / visit of doctors, medical practitioners and medical specialists.

(ii) Bed / room charges of hospitals exceeding Rs. 6,000/- per day per bed / room.

9815.1000

and other

respective

headings

5%

without input tax

adjustment

0% without input tax adjustment.

* as per Table provided under Second Schedule (Taxable Services) to the Punjab Sales Tax on Services Act, 2020.

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