Punjab’s Interim Government to Impose Tax on Rental Properties

After a hot-debate in Punjab Assembly, the Punjab’s Interim Government to Impose Tax on Rental Properties. The decision was made after nine years. Punjab’s interim government has given the green light to the property tax assessment across the province likely impose immediately. According to a report published in Daily The News on Monday, the cabinet has approved a new valuation table for property tax based on current rents.

What’s New in Property Tax Law

The most significant change will be seen in category A areas, where commercial and residential properties in posh localities will face a whopping 400% increase in property tax. This move aims to streamline revenue collection and bring in much-needed funds for public welfare projects.

5-Marla House in Tax Inclusion

As per the approved summary, the new valuation table will span from category A to G. This comprehensive assessment will include even 5-marla houses in posh areas (category A), which were previously exempted from property tax.

The assessment comes after a considerable gap, with the last property tax evaluation in Punjab conducted back in 2014. According to the law, property tax assessments should take place every five years, but it had been overlooked, leading to a backlog of potential revenues.

What Will be Affect on Commercial Properties

The rental values for commercial properties in category A areas have surged over the years, with the rent per sq ft reaching an astounding Rs500. Under the new assessment, property tax will be determined based on the current rental rates. Rental properties especially Commercial ones will be treated as tax against per square feet in urban and posh areas.

Taxes on Automobiles also on the Way

The interim government has also introduced some additional measures related to vehicle taxation. A token tax of Rs2,500 per seat will be imposed on vehicles with seven or more seats. On the other hand, a 3% and minimum 2% tax will be applied to the booking of vehicles ranging from 1,500 to 2,000cc. Moreover, electric vehicle registration will receive a 95 percent exemption from token tax extended until June 30, 2025.

In response to the evolving economic landscape, Punjab has also taken steps to enhance revenue from liquor and vendors. The steelhead duty on liquor has been raised from Rs600 to Rs1,200 per gallon, and the vendor fee has been increased from Rs1,600 to Rs2,500 per gallon.

When will the Tax Be Imposed

The approval of these measures by the cabinet marks a crucial milestone. In ensuring a fair and effective property tax system in Punjab. With the new assessment set to take effect from January 1, 2024. The government aims to bolster its financial resources for essential services and developmental initiatives in the province.