LAHORE: The Excise and Taxation Department Punjab has prepared a summary of the proposed plan of 25 per cent increase in the existing property tax rates throughout the province to present before the new Excise Minister for his approval, The Post has learnt.
Insiders have confided that the department after giving the new Excise Minister Mian Mujataba Shuja Ur Rehman a concise briefing about the department functions and working, is now finalizing the summary.
In the mid 2006, the government had asked the department to survey properties of 118 zones and collect data to help the government revise the property tax which was not revised for the last seven years. The field staff of the E&T department conducted the survey and had proposed 15 to 25 per cent increase on above 5-marla houses used for commercial purposes.
As per the survey, the Property Tax wing has been ordered by the previous government not to announce the increase till general elections because an enhancement of 25 per cent in the existing property tax rates could embarrass the ruling party.
The department while proposing increase in the tax rate was of the view that a survey of the properties was conducted after every five years and this time the department proposed that land lords increase rent by 10 per cent every year while, E&T do not revise its rates even after five years and government should allow the department to enhance property tax rates specially on rented and commercial properties.
Field staff of E&T throughout the city was directed in 2006 to conduct a detailed survey of the areas of their circles by the end of December 2006. Acting to the orders, all the zones completed the survey of the properties and had submitted the survey reports in the respective zonal head i.e. Directors Property Tax. As per E&T officials, the survey reports of the whole province have been submitted by the field staff in January 2007 for the finalisation of recommendations and approval from competent authority.
The officials said that the Director General E&T has to finalise the new tax plan formula but the high ups could not get approval from Punjab Government for the revised and enhanced property tax rates. The department submitted the proposal to the CM’s Secretariat on January 17. The CM Secretariat asked the department to linger on execution of the proposal till next year, saying it would be difficult to levy the new property tax near the elections.
The E&T Director (Properties) Akram Ashraf Gondal had then told the media that the department had submitted the proposals for the enhancement of property tax to the CM’s Secretariat but the authorities concerned did not approve the implementation of the new tax. He said that it was not conveyed to the department for what reasons the execution of the proposals was delayed. He also said that the Department had not proposed any change to the property tax on 5-marla residential houses, which were already exempt from property tax. But the 5-marla houses used for commercial purposes were not given the same. There are 11 zones in the Lahore city excluding Lahore Cantonment area and the rate of property tax on residential property varies from 10 paisa to 40 paisa per square feet depending upon the localities. The rate of property tax for commercial properties is ranging from Rs 2 to Rs 12 per square foot; the rate on the properties varies in different localities.
Punjab CM at a meeting on real-estate investment trust in the beginning of May said that the government was formulating a commercialisation policy and is considering reducing the difference between the rate of tax on owned and rental properties. He added that the laws on rent control, tenancy and joint ownership of condominium property were being reformed.
The E&T Department and Taxation Department administer the property tax, which is levied under the Punjab Urban Immovable Property (Validation Of Tax)Act, 1976 in tehsils and towns notified as rating areas for the assessment of the property tax.
Section 3 of the Act states the property tax is levied on the annual value of the buildings and lands located within a rating area. If the annual value of a building or a piece of land is less than Rs 20,000, 20 percent tax will be levied on it. If the value exceeds Rs 20,000, the property will be taxed at 25 percent. The assessment of the properties is based on the nature of occupation and the type of building.
The Punjab Government since July 1, 2004 exempted the residential properties measuring upto five marla from property tax. Where as properties of retired government officials and widows are already enjoying the tax holiday. The Post tried to contact Additional Director General E&T Javaid Ashraf Dar but he was not available for comments.
Source: The Post