The Khyber Pakhtunkhwa (KP) government has unveiled significant property tax reforms and relief measures as part of its Rs 1,754 billion budget for the fiscal year 2024-25, announced on June 4.
Key highlights of the proposed changes include a reduction in the per kanal tax on factories from PKR 13,600 to PKR 10,000. For commercial properties, the tax rate will be lowered from 16 percent to 10 percent of the monthly rent. Additionally, private hospitals, medical stores, and other health sector businesses will benefit from a reduced tax rate of 5 percent. Finance Minister Aftab Alam presented the budget, noting a projected surplus of Rs 100 billion. The government has planned expenditures of PKR 1,654 billion, with a focus on social protection, peace, employment opportunities, and economic development, as directed by Chief Minister Ali Ameen Gandapur.
The budget also includes a proposed 10 percent increase in both salaries and pensions for government employees, and an increase in the minimum wage from PKR 32,000 to PKR 36,000. The KP government anticipates receiving PKR 1,754 billion from various sources, including PKR 1,212.036 billion from the federal government under the Federal Tax Assignment, one percent of the divisible pool for the war on terror, royalties and surcharges on oil and gas, windfall levy, and net hydel profit.
KP has significantly improved its revenue over the past few years, setting a target of PKR 93.5 billion for 2024-25 through a mobilization plan. The government aims to broaden the tax base rather than increase tax rates, with planned reforms in sales tax, property tax, tobacco tax, cess, and other taxes.
Additionally, the sales tax on various online services will be reduced, including a decrease in the tax on hotels from eight percent to six percent, with the implementation of the Restaurant Invoice Management System. A fixed sales tax rate has been proposed for wedding halls. The government also plans to increase the tobacco development cess and reduce the provincial tax on property transfers from 6.5 percent to 3.5 percent.
