Minister finds property tax exemption on 5-marla houses ‘unjustified’

Lahore: Minister for Finance Hashim Jawan Bakht said on Tuesday that the property tax exemption on 5-marla houses is unjustified and the levy calculations should be based on a property’s value, a news source reported. The minister said this while presiding over a meeting of Punjab Finance Department Resource Mobilisation Committee for the Fiscal Year (FY) 2020-21.

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Bakht stressed for revising the 1958 Act terming it crucial to improve the property tax collection system in the province. “The Government of Punjab wants to promote profitable taxation concept. Consideration should be given to reducing taxes than increasing their rates to improve collections,” he suggested.

According to sources within the Excise and Taxation Department, the government gives annual subsidy of PKR 2.2 billion in terms of tax exemption to owners of at least 2,300,000 5-marla houses in the province. Out of these units, approximately 1,500,000 are located in Lahore where houses located in areas falling in the A-Category do not enjoy this exemption.

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Sources further claim that the A-Category areas only have a limited number of 5-marla units, which does not help generate enough tax revenue. The government has been considering to revoke the exemption and start imposing the property tax on 5-marla houses located in all these areas.

Moreover, Bakht also proposed that the municipal tax should be linked with the property tax. He believes that improvement in water supply and sewerage system would increase the properties’ value.

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The minister also requested the Excise Department to share its suggestions on how to increase the revenue generation from the property sector. The meeting further agreed to keep the upward revision in property valuation tables suspended till June 2021, and discussed the proposition of increasing these by 90% to 100% for the next fiscal year.