In Pakistan, property tax is collected by the Federal Board of Revenue (FBR), which is the central tax authority responsible for collecting federal taxes. The property tax in Pakistan is levied on both residential and commercial properties and is based on the assessed value of the property.
The property tax in Pakistan is a major source of revenue for the government, and it is essential for the development of the country. The tax revenue collected from the property tax is used for the provision of essential services, such as healthcare, education, infrastructure, and other public services.
The property tax rates in Pakistan vary from province to province and depend on the location, size, and type of property. The rates are determined by the respective provincial governments, which have the authority to set their own property tax rates. The property tax rates in Pakistan also vary depending on whether the property is self-occupied or rented out.
The property tax in Pakistan is levied on the annual value of buildings and land located in a specific rating area. This tax is charged at the rate of 5% of the annual value at which the property may be let out on a yearly basis. The assessment of properties is primarily based on the nature of occupation and the type of building, and locality wise yardsticks have been prescribed for commercial and residential properties, whether they are self-occupied or rented.
The annual value of properties is calculated using these yardsticks, and property tax is charged on the rates mentioned above. The tax can be deposited on or before the 30th day of September with a 5% rebate for the current financial year. The payment can be made through a cheque drawn on a scheduled bank in favour of the Excise & Taxation Officer of the concerned district or through a Treasury, State Bank or specified branches of National Bank of Pakistan.
If the tax payable for any year is not paid by the 30th day of September of the said year, a late payment surcharge at the rate of one per cent of the gross payable tax shall stand imposed on the first day of every month of delay. However, a rebate equal to 5% of the amount of annual tax for the financial year is allowed if the annual tax is paid in a lump sum on or before the 30th of September of the financial year.
There are certain exemptions from property tax in Pakistan, which include residential houses constructed on a land area less than 5 Marla other than locality of category “A,” buildings and lands used as public parks and playgrounds, schools, boarding houses, hostels, libraries, and hospitals. Mosques and other religious buildings, properties the rents of which are devoted exclusively to religious or prescribed public charitable institutions, and buildings owned by the government or a local authority, such as a corporation, municipality or town committee are also exempted.
In addition, a single house not commanding annual rent exceeding PKR. 6480/- if occupied by the owner for his residence and buildings owned by widows, minor orphan and/or disabled person tax liability of which is up to PKR.12150/- per annum are exempted. One residential house up to one Kanal owned and occupied by a federal or provincial retired government servant is also exempted.
In conclusion, property tax in Pakistan is levied on the annual value of buildings and land located in a specific rating area, and its assessment is primarily based on the nature of occupation and the type of building. The tax can be paid through various modes, and certain exemptions and rebates are available to eligible individuals and organizations.