Cut in Sales Tax rates ups revenue generation in KP: expert

PESHAWAR: The cut in rates of Sales Tax on various services has led to an increase in revenue collection for the Khyber Pakhtunkhwa government despite coronavirus challenge, said an expert on Wednesday.

“The KP government step to reduce the rate of the Sales Tax on 29 services has worked well and that fetched a greater revenue for the exchequer,” said Muhammad Umair Zeb, a tax expert and member of the Peshawar Tax Bar Association. Taking part in an online session, he said Covid-19 first wave affected the business in the province like elsewhere in the country and other parts of the world.

He said the KP government strategy for dealing with the situation acted effectively and the cut in rates of Sales Tax was part of the very approach.

The expert, who is a member of the Certified Internal Control Auditor – the United States and Income Tax Practitioner registered with the Federal Bureau of Revenue, said Rs4.03 billion were collected through Sales Tax on services, including Infrastructure Development Cess whose share remained about Rs 299 million in the fiscal year 2020-21 during the first quarter despite the situation arising out of Covid-19.

Umair Zeb said the measure to decrease the rates of Sales Tax KP by the Khyber Pakhtunkhwa Revenue Authority (KPRA) had shown better revenue generation on the one hand and provided relief to the business sector which was facing a less business activity for the obvious reasons during the pandemic.

He credited KP Finance Minister Taimur Saleem Khan Jhagra, Director-General Syed Fayyaz Ali Shah and other staff of the KPRA for the achievement.

The expert believed this was a matchless growth shown by the KPRA, hoping the province would act as a safe place for entrepreneurs to register businesses with the KPRA and invest more in KP businesses.

“The decrease in Sales Tax rates lessened the burden on the business sector as the businessmen deposited a greater amount despite the sluggish business,” explained Umair Zeb who is a member of the Association of Chartered Certified Accountant (ACCA-UK/Pakistan) and Certified Public Accountant.

He pointed out that such an initiative was direly needed along with several other steps to cope with the current crisis caused by the coronavirus pandemic. “The revenue collection through taxation was required but by not burdening the taxpayers too much”, he elaborated and said the cut in Sales Tax rates was a wise step.