PUNJAB FINANCE ACT 2016

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THE PUNJAB FINANCE ACT 2016 
(XXXV of 2016) 
CONTENTS 
1. Short title, extent and commencement 
2. Amendment in Act II of 1899 
3. Amendment in Act V of 1958 
4. Amendment in Act X of 1958 
5. Amendment in Act XXXII of 1958 
6. Amendment in Act XIV of 1973 
7. Amendment in section 6 of Act VI of 2010 
8. Amendments in Act XLII of 2012 
9. Amendment in Act XXX of 2015 
10. [*****] 
 
TEXT 
1
THE PUNJAB FINANCE ACT 2016 
(XXXV of 2016) 
[29th June 2016] 
An 
Act 
to levy, alter and rationalize certain taxes, fees and duties in the Punjab. 
 It is necessary in public interest to levy, alter and rationalize certain taxes, 
fees and duties in the Punjab; and, to deal with ancillary matters. 
Be it enacted by Provincial Assembly of the Punjab as follows:– 
1. Short title, extent and commencement .– (1) This Act may be cited as the 
Punjab Finance Act 2016. 
(2)  It extends to whole of the Punjab. 
(3)  It shall come into force on the first day of July 2016. 
2. Amendment in Act II of 1899.– (1) In the Stamp Act, 1899 (II of 1899): 
(a) in section 27-A, in subsection (1), for the expression “Articles 23, 27-A, 
31, 33 or 63”, the expression “Articles 23, 27 -A, 31, 33, 48(b), 48(bb), 
63 or 63-A” shall be substituted; 
(b) in section 29: 
(i) in clause (f), the word “and” shall be omitted; 
(ii) in clause (g), for the full stop, a semi colon shall be inserted; and 
(iii) after clause (g), as amended, the following new clauses (h), (i), 
(j) and (k) shall be inserted: 
“(h) in the case of a contract chargeable with stamp duty 
under Article 22-A of Schedule I, the stamp duty shall be 
payable by the contractor in whose favour the instrument 
is executed; 
(i) in the case of a decree, rule of a court or an order of a 
court chargeable with stamp duty under Article 27 -A of 
Schedule I, the stamp duty shall be paid by the 
beneficiary of the decree, rule or order; 
(j) in the case of a gift chargeable with stamp duty under 
Article 33 of Schedule I, the stamp  duty shall be paid by 
the person in whose favour the instrument is executed; 
and 
                                                
1
This Act was passed by the Provincial Assembly of the Punjab on 27 June 2016; assented to by the Governor of the Punjab on 
28 June 2016; and, was published in the Punjab Gazett e (Extraordinary), dated: 29 June 2016, pp. 6083-6092. 
(k) in the case of transfer of right or interest relating to an 
immovable property chargeable with stamp duty under 
Article 63-A of Schedule I, the stamp duty shall be paid 
by the person in whose favour the transfer of the right or 
interest relating to an immovable property is made.”. 
(2) In Schedule I, at Sr. No. 48: 
(a) in clause (b), for the words “Three percent of the amount of the 
consideration”, the words “Three percent of the amount 
calculated according to the value notified by the District 
Collector” shall be substituted; and 
(b) in clause (bb), for the words “Twelve hundred rupees”, the 
following shall be substituted: 
“(a) Twelve hundred rupees in case the Power of Att orney is 
executed between spouses or between one wife or 
widow and another wife or widow of the same husband, 
or between father, mother, son, daughter, grandparents, 
grandchildren or siblings; and 
(b) Two percent of the value calculated according to the 
value notified by the District Collector in all other cases.”. 
3. Amendment in Act V of 1958 .– In the Punjab Urban Immovable Property 
Tax Act, 1958 (V of 1958): 
(a) in section 2, after clause (a), the following new clause (aa)  shall be 
inserted: 
“(aa) “buildings and lands” include vacant plots or a parcel or portion 
thereof having fixed boundaries intended for specific purpose 
including residential, commercial or industrial use;”; 
(b) in section 4: 
(i) in clause (d), the following Explanation shall be insert ed and 
shall be deemed always to have been so inserted: 
“Explanation.– The expression “buildings and lands or portions 
thereof” shall mean the buildings and lands or portions thereof 
owned by the Government or by a body owned or controlled by 
the Government;”; 
(ii) for clause (i), the following shall be substituted: 
“(i) One residential house or vacant plot, measuring an area 
not exceeding five marla, used or to be used for 
residential purpose except a residential house or vacant 
plot with annual value of m ore than five thousand rupees 
situated in a part of a rating area and categorized as 
category-A area;”; and 
(iii) after clause (i), the following clause (j) shall be inserted: 
“(j) a vacant plot whose possession is handed over to the 
owner for the first ti me and remains vacant or without 
construction for a period not more than two years from 
date of delivery of possession.  
Explanation.– If possession is handed over to any 
owner, the period of two years shall be reckoned from 
that date even if the plot is t ransferred to a subsequent 
owner.”; 
(c) in section 5 -A, for the full stop, a colon shall be substituted and 
thereafter, the following proviso shall be inserted: 
“Provided that the annual value of a vacant plot shall be in accordance 
with the valuation tabl e notified for respective locality of the rating 
area.”; and 
(d) after section 16, the following section 16-A shall be inserted: 
“16-A. Registering authority to ensure payment of tax .– The 
authority responsible for registering an instrument of sale, gift o r 
exchange of immovable property shall not register the instrument 
unless it is satisfied that the outstanding tax has been paid.”. 
4. Amendment in Act X of 1958 .– In the Punjab Entertainment Duty Act, 1958 
(X of 1958), i n section 3 -A, in the Table, at Sr.  No.2, in column 2, for the word 
“Circus”, the words “Circus, well of death, swings and magic shows” shall be 
substituted. 
5. Amendment in Act XXXII of 1958 .– In the Punjab Motor Vehicles Taxation 
Act, 1958 (XXXII of 1958): 
(1) in section 3: 
(a) in subsect ion (1), for the full stop at the end, a colon shall be 
substituted and thereafter, the following provisos shall be added: 
“Provided further that if so opted by the owner of a tricycle 
propelled by mechanical power (motor rickshaws), the tax may 
be paid in  lump sum once for all at the rate specif ied in the 
Schedule of this Act: 
Provided further that if so opted by the owner of a motor vehicle 
having engine capacity exceeding 1000cc but not exceeding 
1300cc, the tax may be paid in lump sum for a period of th ree 
years at the rate specified in the Schedule of this Act.”;  
(b) in subsection (3), for the word “July”, the word “August” shall be 
substituted; 
(2) in section 4, in subsection (2), in the Table, after Sr. No. 6, in columns 
1 to 3, the following entries at Sr. No. 7 shall be inserted: 
“7. For periodic lump sum payment of the motor 
vehicle. 
At any time” 
(3) in the Schedule, at S.No.3, in clause (a), in column 3, for the 
expression “Rs.400/-”, the expression “Rs.400/ - per annum or Rs.3,000/ - lump sum 
once for all if so opted by the owner” shall be substituted. 
6. Amendment in Act XIV of 1973 .– In the Punjab Finance Act, 1973 (XIV of 
1973), in Second Schedule, in  Serial No. 9, in clause (c), for paragraph (ii), the 
following shall be substituted: 
“(ii) exceeding 1000cc but not exceeding 
1500cc 
(iia) exceeding 1500cc but not exceeding 
2000cc 
2% of the value of the vehicle 
3% of the value of the 
vehicle”. 
7. Amendment in section 6 of Act VI of 2010 .– In the Punjab Finance Act, 
2010 (VI of 2010), in section 6: 
(a) in subsection (3), the words “or power of attorney” shall be omitted; and 
(b) in subsection (4), clause (c) shall be omitted. 
8. Amendments in Act XLII of 2012 .– In the Punjab Sales Tax on Services Act 
2012 (XLII of 2012): 
(a) in section 10, subsections (4) and (5) shall be omitted; 
(b) in section 14, after subsection (2), the following subsection (3) shall be 
inserted: 
 “(3) Where a person or class of persons is required to 
withhold or deduct full or part of the tax on the provision of any taxable 
service or class of taxable services and either fails to withhold or 
deduct the tax or having withheld or deducted the tax, fails to deposit 
the tax in the Government treasury, such person or class of persons 
shall be personally liable to pay the amount of tax to the  Government 
in the prescribed manner.”; 
(c) for section 16, the following shall be substituted: 
“16. Deduction and adjustment of tax on inputs to the 
business.– (1) A person required to pay tax under this Act shall be 
entitled to deduct from the payable am ount, the amount of tax payable 
or already paid by him on the receipt of taxable services exclusively 
used in connection with the taxable services he provides, subject to the 
condition that he holds a true and valid tax invoice not older than six 
tax periods, showing the amount of tax charged under the Act on the 
services so received, but the Authority may disallow or subject to 
additional conditions may restrict such deduction in cases or with 
respect to taxable services or goods specified in section 16A or section 
16B or the rules. 
(2) The Authority may, subject to section 16A or section 16B 
or to such conditions and restrictions as may be prescribed, allow 
registered persons to claim adjustments or deductions, including 
refunds arising as a result thereof, in respect of the tax paid or payable 
under any other law in respect of any taxable service or goods or class 
of taxable services or goods used in connection with the taxable 
services such persons provide.  
(3) For purposes of subsection (2), the Authori ty may adopt 
the principles or concepts laid down in such other law in respect of 
adjustments, deductions or refunds including zero-rating principle.  
(4) For purposes of subsections (1) and (2), the amount of 
tax to be deducted or adjusted shall not inclu de any amount of 
additional tax, default surcharge, fine, penalty or fee imposed or 
charged under this Act or any other law.”. 
(d) after section 16, the following sections 16A and 16B shall be inserted: 
“16A. Certain transactions not admissible .– (1) Notwithstanding 
anything contained in this Act or any other law for the time being in 
force, payment of the tax amount for a transaction exceeding value of 
fifty thousand rupees, shall be made by a crossed cheque drawn on a 
bank or by crossed bank draft or cros sed pay order or any other 
crossed banking instrument showing transfer of the amount of the 
sales tax invoice in favour of the service provider from the business 
bank account of the service recipient. 
(2) Online transfer of payment from the business accoun t of 
service recipient to the business account of service provider as well as 
payments through credit card shall be treated as transactions through 
the banking channel, subject to the condition that such transactions are 
verifiable from the bank statements  of the respective service recipient 
and the service provider. 
(3) The service recipient shall not be entitled to claim input 
tax credit, adjustment or deduction, or refund, repayment or zero -rating 
of tax under this Act if payment for the amount is made o therwise than 
in the manner prescribed in subsection (1), provided that payment in 
case of a transaction on credit is transferred within one hundred and 
eighty days of issuance of the tax invoice. 
(4) The amount transferred in terms of this section shall b e 
deposited in the business bank account of the service provider; 
otherwise, the service provider shall not be entitled to claim input tax 
credit, adjustment or deduction, or refund, repayment or zero -rating of 
tax under this Act. 
Explanation.– For purpose s of this section, the term “business bank 
account” means a bank account utilized by the registered person for 
business transactions, declared to the Authority in the prescribed 
manner. 
16B. Tax credit not allowed .– (1) Notwithstanding anything 
contained i n this Act or the rules, a registered person shall n ot be 
entitled to claim input tax adjustment in respect of: 
(a) capital goods (plant, machinery, equipment and others) 
not exclusively useable or used in providing taxable 
services; 
(b) goods and services already in use on which the tax is not 
paid, or, where paid, the input adjustment has been taken 
before the commencement of the Act or where the input 
related goods and services were purchased or acquired 
before such commencement; 
(c) utility bills not in the name of  registered person with 
reference to his registered premises unless evidence of 
consumption is produced in the matter of such claims; 
(d) the tax claimed as input tax on services where such tax 
amount has not been deposited by the supplier or the 
service provider or where the evidence of such payment 
is not produced; 
(e) carry forward of the input tax adjustment relating to the 
period prior to the commencement of the Act; 
(f) goods and services received against false, fake, forged, 
flying, untrue, unreal or unrelated i nvoices or against 
purchases from the persons black listed or suspended by 
the Authority or by the Federal Board of Revenue or by 
any other Provincial authority; 
(g) goods and services liable to a tax rate lesser than sixteen 
per cent of the charges or to a sp ecific rate of tax not 
based on value when used for providing or rendering any 
service; 
(h) goods and services used or consumed in a service liable 
to a rate of tax lesser than the sixteen per cent of the 
charges or to a specific rate of tax not based on value; 
(i) vehicles including three and two wheelers; 
(j) food, beverages, garments, fabrics or others and 
consumption on entertainment, amusement, recreation or 
enjoyment; 
(k) gift and giveaway; 
(l) goods or services used or to be used for any purpose 
other than for taxable s upplies made or to be made by 
him; 
(m) goods and services acquired for personal or non -
business consumption; 
(n) goods and services not related to the taxable supplies 
made by the registered person; 
(o) goods and services in respect of which input tax 
adjustment is ba rred under the respective federal and 
provincial sales tax law; 
(p) sales tax paid to the Federal Government or any other 
Provincial Government for supply of goods or provision of 
services, if the sales tax law of the Federation or the 
Province concerned does not allow adjustment of tax 
paid under this Act; 
(q) from the date to be notified by the Authority, such goods 
and services which, at the time of filing of return by the 
buyer, have not been declared by the supplier in his 
return; 
(r) further tax, extra tax and va lue addition tax levied under 
the Sales Tax Act, 1990, and the rules or notifications 
issued thereunder; 
(s) goods used in, or permanently attached to, immoveable 
property, such as building and construction material, 
paints, electrical and sanitary fittings, p ipes, wires, 
cables, glass products and furniture, furnishings, office 
equipment, excluding those directly used in the economic 
activity of registered persons paying sales tax at a rate of 
not less than sixteen per cent; and 
(t) such goods or services as are n otified or specified by the 
Authority to be inadmissible for input tax adjustment. 
(2) No person other than a registered person shall make any 
deduction or reclaim input tax in respect of taxable services made or to 
be made by him. 
(3) Notwithstanding anyt hing contained in any other law for 
the time being in force or any decision of any court, for purposes of this 
section, no input tax credit shall be allowed to the persons who paid 
fixed tax under any provisions of this Act or under the respective 
federal or provincial sales tax law.”; 
(e) in section 35, after subsection (1), the following subsection (1A) shall 
be inserted: 
“(1A) A statement, in the prescribed manner, filed by a person 
who is only obliged to withhold or deduct tax, shall be treated as a 
return of that person, provided that such a statement shall not be a 
substitute for the return required to be filed by a person providing 
taxable services.”; 
(f) in section 48, in subsection (2), in the Table, in S.No.2, in column 3, for 
the word “five”, the word “ten” and for the word “hundred”, the words 
“two hundred” shall be substituted; 
(g) in section 60, in subsection (1), in clause (b), the expression “exceeds 
one million rupees, but” shall be omitted; 
(h) in section 70, in subsection (1), after the wor ds “the officer of the 
Authority”, the expression “appointed under section 39” shall be 
inserted; 
(i) in First Schedule, at 9809.0000, in column 2, for the word “work”, the 
word “works” shall be substituted; and 
(j) in Second Schedule: 
(a) at S.No.1, in co lumn 2, for the existing entry, the following shall 
be substituted: 
“Services provided by hotels, motels, guest houses, marriage 
halls and lawns (by whatever name called) including pandal and 
shamiana services, catering services (including all 
ancillary/allied services such as floral or other decoration, 
furnishing of space whether or not involving rental of equipment 
and accessories) and clubs including race clubs and their 
membership services including services, facilities or 
advantages, for a subscriptio n or any other amount, to their 
members.”; 
(b) at S.No.2: 
(i) in column 2, for the existing entry, the following shall be 
substituted: 
“Advertisement on television and radio or advertisement 
services showcasing of any product or service in video 
programs, tele vision programs or motion pictures or 
music albums, excluding advertisements: 
(a) sponsored by an agency of the Federal or 
Provincial Government for health education; or  
(b) financed out of funds provided by a Government 
under an agreement of foreign grant-in-aid; or 
(c) conveying public service message, if telecast on 
television by the World Wide Fund for Nature 
(WWF) or United Nations Children’s Fund 
(UNICEF).”; and 
(ii) in column 3, for the existing entry, the following shall be 
substituted: 
"9802.1000, 9802.2000 and respective headings”; 
(c) at S.No.12: 
(i) in column 2, for the existing entry, the following shall be 
substituted: 
“All kinds of advertisement services including 
advertisements on hoarding boards, pole signs and sign 
boards and on closed circuit TV, website s or internet, 
advertisements through brand activation in any mode, 
advertisement on moving vehicles, aerial advertising, 
advertisement through provision of space or time, or on 
bill-boards, public places, buildings, conveyances, cell 
phones, automated tel ler machines, or through offering 
product exclusivity in any manner.”; and 
(ii) in column 3, the following shall be inserted: 
“9802.3000, 9802.5000, 9802.9000 and r espective 
headings.”; 
(d) at S.No.14, in column 2, for the existing entry, the following shall 
be substituted: 
“Construction services and services provided by contractors of 
building (including water supply, gas supply and sanitary works), 
roads and bridges, electrical and mechanical works (including 
air conditioning), horticultural works, multi -discipline works 
(including turn-key projects) and similar other works but: 
EXCLUDING: 
(i) where the tax is otherwise paid by registered 
persons as property developers, builders or 
promoters for building construction; or 
(ii) where the construction work is funded under an 
agreement of foreign grant -in-aid or involves 
construction of consular buildings; or 
(iii) residential construction projects where the 
covered area does not exceed 10,000 square feet 
for a house and 20,000 square feet for an 
apartment except where constructio n services are 
provided to construct more than one house or 
more than one apartment building.”;  
(e) at S.No.15, in column 2, the words “excluding actual purchase 
value or documented cost of land” shall be omitted; 
(f) at S.No.16, in column 2, for the word  “work”, the word “works” 
shall be substituted; 
(g) at S.No.31:  
(i) in column 2, after the words “support services”, the words 
“including business auxiliary services” shall be inserted; 
and 
(ii) in column 3, for the existing entry, the following shall be 
substituted: 
“9805.9200, 9805.9090 and respective headings”  
(h) at S.No.39:  
(i) in column 2, after the words “or cleaning services”, the 
words “including collection and processing of domestic 
waste and street cleaning services” shall be inserted; and 
(ii) in column 3, for  the existing entry, the following shall be 
substituted: 
“98.22, 9860.0000 and respective headings”  
(i) at S.No.47, in column 2, after the word “conduit”, the expression 
“, transmission lines” shall be inserted; and 
(j) after S.No.59, in columns 1 to 4, the following new entries 60, 61 
and 62 shall be added: 
“60 Services provided by 
cosmetic and plastic 
9847.0000 
and 
Sixteen per cent 
surgeons and hair 
transplant services 
but: 
EXCLUDING: 
Services provided to 
acid or burn victims. 
respective 
headings 
61 Services provided by 
warehouses or 
depots for storage 
including cold 
storages.  
9833.0000 
and 
respective 
headings 
Sixteen per cent 
62 
 
Services provided by 
Packers including 
handling and 
packaging services. 
9819.1400, 
9833.0000, 
9841.0000 
and 
respective 
headings  
Sixteen per cent” 
9. Amendment in Act XXX of 2015 .– In the Punjab Infrastructure Development 
Cess Act 2015 (XXX of 2015), in section 2, for clause (k), the following shall be 
substituted: 
“(k) “value” means the value of goods being imported or expor ted, as 
determined by an officer of customs for purposes of the Customs Act, 
1969, provided that in case of goods manufactured, produced or 
consumed in Pakistan, the value shall be determined by reference to 
the value determined under the Sales Tax Act for  purposes of levy and 
payment of sales tax.”. 
10. 
2
[* * * * * * * * * * * *  ] 
                                                
2
Omitted by the Punjab Finance Act  2019 (XV of 2019), published in the Punjab Gazette (Extraordinary), dated: 28 June 2019, 
pp. 4105-4114, s. 8.