KP Budget Targets Revenue Growth Through Tax Amendments and Incentives

Peshawar: The Khyber Pakhtunkhwa government has proposed several fiscal reforms, tax incentives and new revenue streams in the finance bill for the next fiscal year. The proposed measures are aimed at increasing provincial revenue, expanding the tax net and ensuring the provision of resources for development projects.

According to the documents, the provincial government has proposed to provide a 30 percent discount to the owners of residential properties on a lump-sum payment of arrears. This facility will be available to those citizens who will pay their dues by June 30, 2026. However, the government has made it clear that penalties will be imposed on those who do not pay by December 31, 2026.

The finance bill also includes new proposals related to the transport sector. It has been proposed to impose an annual tax of Rs 1,000 on motor rickshaws and three-wheeled vehicles. Similarly, it has been proposed to collect Rs 400 per seat on commercial vehicles with 6 to 15 seats and Rs 500 per seat on vehicles with more than 15 seats.

A new tax policy has also been recommended for the hotel industry. Hotels connected to the point-of-sale system will be charged a 5 percent tax on rooms and bookings. On the other hand, hotels that will not be part of this system will be charged 10 percent of the actual rent based on 50 percent of the available residential units.

According to the budget documents, it has been proposed to allocate Rs 2,170 billion for total provincial expenditure. Of this, more than Rs 1,645 billion will be allocated for ongoing expenditure while more than Rs 524 billion will be allocated for development programs.

According to the documents, the province is expected to receive more than Rs 1,584 billion in federal revenue. In addition, billions of rupees are also expected to be received in the form of anti-terrorism expenses, oil and gas surcharge and windfall levy.

According to experts, the proposed finance bill is being described as an important effort to improve provincial financial discipline and provide additional resources for development activities.