Punjab Govt Slashes Sales Tax on Ride Hailing Services

In a recent development, the ride-hailing services in Punjab have been brought under the sales tax net, following the approval of the 2020 Finance Bill that was tabled by provincial Finance Minister Makhdoom Hashim Jawan Bakht yesterday.

Prior to the said development, the ride-hailing services were operating under the ‘rent-a-car’ tax category, whereby they were liable to pay 16% tax . Whereas now, under the Punjab Sales tax on Service act 2012, the ride-hailing services are liable to pay 4% tax, which is significantly less than what they had to pay previously.


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Also, it has been observed that the Punjab government also reduced tax percentages on over 20 service-based organizations, while holding back from imposing any new tax in the coming fiscal year.

As per the reports, the tax rates have been slashed significantly for the service-based businesses, going from 16% to 5% or in the case of some businesses, zero percent for the coming fiscal year.

Reportedly, the government has gone through with this strategy in the interest of encouraging the businesses to get into a higher gear and boost their activities. The government foresees that this is likely to enhance the revenue stream, as well as improve the economic activities in Punjab.


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COVID-19 has thrown many businesses far off the track due to the enforcement of strict lockdowns from the government to contain the early spread. However, it appears that the wheels are turning in the right direction, with the lockdowns having been eased across the country, and with Punjab government coming forth to encourage the businesses to better themselves by offering tax relaxations.