From Abid Usman
LAHORE: The Punjab government has introduced sweeping reforms to its tax system through a new finance bill presented to the provincial assembly on Monday. A major feature of the bill is a strict penalty regime targeting businesses that refuse to accept digital payments, with fines reaching up to Rs1 million.
The bill also transitions the Punjab Sales Tax on Services (PSTS) regime from a “positive list” to a “negative list” system under the Punjab Sales Tax on Services Act 2012. This change aligns with global best practices and is expected to significantly expand the tax net. Under the new approach, only services explicitly listed in the negative list will be exempt from PSTS, meaning all others are taxable. A total of 26 service categories have been placed on this negative list.
Despite reducing its revenue estimates from Rs471 billion to Rs421 billion for FY25, the Punjab government has set an ambitious target of Rs524.7 billion in provincial tax revenues for FY26.
The proposed penalty for refusing electronic payments is substantial.
Any person declining payments made via debit or credit cards, mobile wallets, or QR codes may face a fine of up to Rs1 million. The first violation will carry a minimum penalty of Rs400,000, with each subsequent violation costing no less than Rs300,000. In cases of three such violations, the business premises may be sealed for up to one month.
Additionally, the bill proposes enhanced penalties for non-compliance with the Electronic Invoice Monitoring System (EIMS), further reinforcing the government’s move toward digitised documentation and payment systems.
