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Business Recorder
09-07-2025
- Business
- Business Recorder
Commercial property rent in Punjab: CAP concerned over imposition of 16pc ST
LAHORE: The Chainstore Association of Pakistan (CAP), the leading representative body for the organized retail sector, has expressed deep concern over the imposition of a 16% sales tax on the rental of commercial properties in Punjab under the recently enacted Punjab Finance Act, 2025. The association warns that this new tax regime will significantly raise the cost of doing business and worsen an already fragile investment climate. Rana Tariq Mehboob, Patron-in-Chief of the Chain store Association of Pakistan, strongly criticized the imposition of a 16% sales tax on commercial property rent, calling it economically unsound and legally indefensible. He emphasized that the global tax models Pakistan claims to follow do not treat rental property as a taxable service, and such a move introduces serious implementation and legal challenges. 'Renting commercial space in Punjab has just become prohibitively expensive,' he stated. 'This tax places an unsustainable burden on already struggling retailers and entrepreneurs at a time when economic activity is under immense pressure. Instead of encouraging growth and formalization, such punitive measures risk driving legitimate, tax-compliant businesses into the informal sector.' He urged the government to reconsider this policy in favour of more balanced, transparent, and business-friendly reforms that promote investment, stability, and long-term economic resilience. Asfandyar Farrukh, Chairman of the Chainstore Association of Pakistan, echoed these concerns and highlighted the broader implications of such taxation policies on Pakistan's economic outlook. 'We are witnessing an erosion of business confidence across the retail sector,' he remarked. 'The introduction of a 16% sales tax on rental spaces is not just a financial blow — it is a signal that doing business is becoming increasingly unpredictable and risk-laden. He further emphasized that imposing additional taxes without proper consultation or impact analysis could lead to contraction in the formal retail sector, job losses, and decline in investor interest, both local and international. CAP warned that the current approach undermines the government's own stated objectives of economic revival, export enhancement, and broadening the tax base through inclusive policies. The Chainstore Association of Pakistan strongly urges the Punjab Government to immediately suspend the 16% sales tax on commercial rentals and engage in constructive dialogue with all stakeholders to develop business friendly and growth-oriented policies. Copyright Business Recorder, 2025
Business Recorder
25-04-2025
- Politics
- Business Recorder
Electricity duty on self generation: SC dismisses review pleas of Punjab govt
ISLAMABAD: The Supreme Court dismissed the review petitions of the Punjab government regarding levy of electricity duty on the companies which produce power from generator of more than 500kW capacity to produce electricity for self-use. A three-judge bench headed by Justice Munib Akhtar and comprising Justice Ayesha A Malik and Justice Aqeel Ahmed Abbasi, heard review petitions of the Punjab government against the SC's decision. The provincial government had filed a total of 46 review petitions. Mian Mahmood Rashid appeared on behalf of most of the textile mills. At the onset of the proceedings, the additional advocate general (AAG), Punjab contended that in the appeals the issue of the applicability of Article 157 of the Constitution was required to be decided. However, the bench referred paragraph 3 of the judgment, wherein, it was categorically observed that the issue of constitutionality of the levy in terms of Article 157 was not pursued by either side and therefore these appeals fall to be decided solely on the ground whether, in the facts and circumstances of the case, Sec 13 of the Punjab Finance Act, 1964 was applicable in terms as sought to be imposed on the respondents in terms of the 2001 notification, whereby, this levy on self-generation and self-use of electricity was imposed on the mills and other commercial establishments including hospitals, etc. The bench members repeatedly asked the AAG to point out any paragraph of the judgment sought to be reviewed, wherein, mistake or error floating on the surface of the judgment. However, the AAG was unable to point out any error or mistake apparent on the face of the record. The bench; therefore, dismissed all the review petitions reinforcing that no electricity duty could be realised on the self-generation of electricity from the generators of 500kW and above. The court in its judgment dated 29-02-24 had ruled that the mills and others, which used private generators of more than 500kW capacity to generate electricity for self-use, are not liable to pay the electricity duty on their own self use of the power/ energy generated by their generators of more than 500 kW capacity. The Punjab government on 25-08-2001 issued Punjab Finance Ordinance, 2001 to make changes in Section 13 of the Act that resulted in the application of the levy known as the electricity duty on the respondents. This levy was challenged in the Lahore High Court (LHC) by writ petitions on various grounds. The constitutionality of Section 13 was also brought into play. The provincial government took its stand on constitutionality in terms of Article 157 (2) (b) of the single bench of the LHC had dismissed the petitions. Consequently, the intra-court appeals were filed before a Division Bench of the High Court, which reversed the judgment. Being aggrieved by this decision, the Punjab provincial government approached the apex court. It contended that up to 2001 the respondents may have been entitled to the benefit of the 1985 notification but thereafter the position changed fundamentally on account of the new definition of 'licensee' substituted by the 2001 Ordinance, which stated 'any person generating the electric power from a generator having the capacity of more than five hundred kilowatt for self-use they statutorily became licensees.' Copyright Business Recorder, 2025
