Punjab tax authorities to keep eyes on incomes of beauty salons

The Punjab Revenue Authority (PRA) has announced that it is actively pressing on with efforts to add more services to the tax net in order to step up revenue collection across the province.

In a fresh move to keep a close watch on popular service providers, the provincial tax authority, in collaboration with the Punjab Information Technology Board, has developed an invoice monitoring system for beauty parlours running in the province.

Though this sector has been among 61 services, identified by the tax authorities as potential taxpayers, for the past three years, the taxmen have not been very active in this area for a variety of reasons.

Talking to The Express Tribune, PRA Additional Commissioner Shahzad Gondal recalled that the salons operating in Lahore under the banner of Hair and Beauty Salons Association had been demanding reduction in sales tax for a long time.

 “The lobby group had even filed a request, asking the PRA to consider reducing sales tax on beauty parlours from 16% to around 5%,” he said.

After scores of meetings with industry representatives to find a workable solution, Gondal said, it was mutually agreed that the proposed tax reduction would only be applicable to those salons that opted for the invoice monitoring system. The system will be installed on business premises for monitoring sales invoices on a real-time basis.

“It is expected that the monitoring system will be inaugurated on April 10 this year,” he said.

At present, only 287 beauty service providers are registered taxpayers, of which 209 are working in Lahore.

According to PRA estimates, approximately 2,000 hair and beauty salons are currently running in the provincial capital. “These salons generate a reasonable income and will be registered with the PRA,” Gondal said.

Apart from these, he added, hundreds of salons were operating in far-off areas of the city, but the PRA was not considering bringing them under the tax net as they did not earn much.

From the 287 registered salons, the PRA receives Rs4-8 million in revenues annually, depending on seasonal activities.

It has widened the tax base from 21 services in 2012-13 to 59 services in 2015-16, collecting total revenues of Rs61.45 billion from these services.

Though the figure is much lower than estimates of the provincial government at the beginning of fiscal year 2015-16, it is 41% higher than the previous year.

The invoice monitoring system for beauty parlours is the same as that for restaurants in the metropolitan cities of Punjab. The PRA expects a considerable improvement in revenue receipts from the beauty salons after the new monitoring system is put in place.

Masarrat Misbah, CEO of Depilex Beauty Clinic and Institute and a representative of Hair and Beauty Salons Association, did not respond to calls made to seek her comments.

Published in The Express Tribune, March 14th,2017.