LAHORE: Sources revealed that housing societies in Punjab are deliberately evading registration with the Punjab Revenue Authority (PRA) to avoid paying sales tax on services.
As per the details, most housing societies ignore the registration process with the revenue authority altogether and instead choose to challenge the recovery proceedings initiated when the authority forcefully registers them.
Property developers argue that the nature of services provided by housing societies has not been determined by the authority, using this as a defense to thwart recovery proceedings.
However, officials from the authority believe that all housing societies are involved in offering property developer services, which are subject to taxation under the Punjab Sales Tax on Services Act, 2012.
If property developers fail to register voluntarily, the authority resorts to compulsory registration, requiring the housing societies to pay sales tax on services.
Despite receiving call-up notices to explain why sales tax cannot be assessed against them, housing societies choose to ignore the notices until recovery proceedings are initiated.
The details suggest that the tax consultants also advise them to disregard the notices until they face recovery proceedings, which they then challenge in relevant forums to minimize their tax liability.
This results in unnecessary financial resources and time wasted for both the authority and taxpayers involved in proving their respective viewpoints.
Representatives of housing societies fail to take advantage of the time and opportunity provided by assessing officers to present their defense, opting not to appear before the forum until recovery proceedings are initiated.
The authority, to promote tax culture in the province, provides taxpayers with sufficient time and opportunities.
However, taxpayers misuse this leniency, causing undue delays in the recovery of the owed tax.
It is worth noting that the imposition of sales tax on services related to real estate development, developers, and promoters was introduced in 2013 through a notification that became part of the Act.
Source: Business Recorder
