Tax Summary of Khyber Pakhtunkhwa Budget 2024-25 Proposals

The Khyber Pakhtunkhwa (KP) government’s budget for the upcoming fiscal year takes a two-pronged approach to taxation: offering targeted tax relief while implementing strategies to improve revenue collection.

Tax Relief Measures:

  • Sales Tax: The budget proposes a decrease in sales tax for online services, making them potentially more affordable.
  • Hotel Tax: Relief for the hospitality industry comes in the form of a reduced tax rate, from 8% to 6%. However, hotels will be required to adopt a Restaurant Invoice Management System for better tax tracking.
  • Wedding Halls: To streamline taxation for wedding venues, a fixed sales tax rate is proposed.
  • Property Tax: The budget offers property tax reductions for specific sectors. Factory owners benefit from a lower tax per kanal, while commercial properties see a decrease from 16% to 10% of monthly rent. Additionally, private hospitals, medical stores, and other healthcare businesses receive a significant reduction to just 5% of monthly rent.
  • Property Transfer Tax: The cost of transferring property ownership is lowered with a reduced tax rate, from 6.5% to 3.5%.

Revenue Mobilization Strategies:

  • Tax Base Expansion: The government plans to improve tax collection efficiency by reforming various taxes, including sales tax, property tax, and tobacco tax.
  • Tobacco Development Cess: To generate additional revenue from tobacco production, the budget proposes an increase in this specific cess.

Overall Impact:

The Khyber Pakhtunkhwa budget aims to strike a balance between offering tax relief for specific sectors and implementing strategies to strengthen the province’s tax collection system. This approach could potentially stimulate certain industries while ensuring the government has a stable revenue stream for development projects.

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