Friday, April 11, 2014

What is a Marla?

What is a Marla?

A Marla is a unit of land; it is used in Indian Subcontinent for measuring land area. Traditionally, people measure land in Marla. Property developers/ colony developers sell small houses in 3.5 Marla, 5 Marla, 7.5 Marla and 10 Marla units.

A Marla is equal to 272 Square feet. However, this is traditional measure used in British India. Currently in Pakistan, two different measure are use:

(i) 1 Marla = 270 Square feet; and

(ii) I Marla = 250 Square feet.

If one Marla is 270 square feet, typical dimensions of a five Marla and ten Marla house are 27X100 and 27X50 Square feet. It means a typical ten Marla house has a length of 100 square feet and width of 27 square feet. Similarly, a five Marla house has a length of 50 square feet and width of 27 square feet

If one Marla is 250 square feet, typical dimensions of a five Marla and ten Marla house are 25X100 and 25X50 Square feet. It means a typical ten Marla house has a length of 100 square feet and width of 25 square feet. Similarly, a five Marla house has a length of 50 square feet and width of 25 square feet.

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Sunday, March 9, 2014

Property Tax Calculator: Punjab, Pakistan

Property Tax Calulation Image

The government of the Punjab, Pakistan has made a Property Tax Calculator available with the Taxpayer online to help them find their tax liability; this calculator has made property tax calculation possible and easier for them. Previously , the tax liability was based on rents of the properties, but it is now based on average rents of localities by using system of categories. Therefore, your tax liability may change with the change in:

1 - Area of the property;

2 - Covered Area of the property;
3 - Use of the Property; and
4 - Category of the locality in which the property is situated.

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Property Tax Calculator

How to use the Property Tax Calculator

Punjab, Pakistan: Property Tax

Thursday, March 6, 2014

Pakistan: Property Tax Calculation Formula

In Pakistan, Property Tax is calculated using the following formula:

Property Tax = Value of the Property  X  Rate of Property Tax

Rate of Property Tax is determined by the provincial assembly for collection and assessment of Property Tax.

The Value of a Property is determined by the size of the property and applicable valuation rates. The valuation rates are rates from a notified Schedule or Table of Valuation.

Property Tax calculation in Pakistan is similar across the country with minor changes for calculations in provinces; therefore, you find property tax calculation formula in Punjab similar to the formulas in other provinces.

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Understanding your PT1 form

What are property tax rates in Punjab, Pakistan?

Sunday, March 2, 2014

Punjab, Pakistan: Disabled People and Property Tax

Property Tax Exemption for Disabled Persons - ImageDisability places people in a special class: Special People. The federal and provincial governments and NGO's actively work for the welfare of disabled persons. (List of NGO's working for disabled personsThese people have certain right that government gives them due to their inability to live a normal life like a normal person.  One such special right is exemption from payment of Property Tax up to a certain limit.

Disabled People and Property Tax in Pakistan

Exemption from property tax is available with several classes of persons owning properties and several types of properties. One eaxample of such exemptions is exemption for disable persons. Thus, if a disabled person owns a real or immovable property, he, or she will not pay property tax. However, the person will have to pay the tax in excess of Rs. 1,2150. This amount of tax corresponds to annual value of Rs 48,600.

For viewing a full set of exemptions from payment of property tax, click here.

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Property Tax in Pakistan

Friday, February 28, 2014

Property Tax in Pakistan

Property Tax in Pakistan

Property Tax in Pakistan is a local tax on properties. A local tax is a tax that falls in jurisdiction of a local government as against federal and provincial taxes which fall in jurisdiction of the federal and provincial governments respectively. All the four provinces have their legislation on the property tax assessment and collection. The laws are:
  1. The Punjab Urban Immovable Property Tax Act 1958;
  2. The Sindh Urban Immovable Property Tax Act 1958;
  3. The Khyber-Pakhtunkhwa Urban Immovable Property Tax Act 1958; and
  4. The Balochistan Urban Immovable Property Tax Act 1958.

These laws are similar in nature and mechanism for assessment and collection of Property Tax. Hence, if you are good at understanding and using tax payment system in a province, you can easily translate your knowldge for use in other provinces.

Property tax is calculated on the value of a property; the value in turn is assessed value of the property, not market value.

Property Tax in Pakistan is a local tax, but it is not assessed and collected by the local government. Four provincial governments collect this tax for local governments. They get collection charges of 15% and give the rest of collection (85%) to their local governments in ratio of tax collected from the geographical areas under the local governments.

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Thursday, February 27, 2014

Property Tax assessment procedure in Sindh, Pakistan

How Properties are Assessed

Property tax payable for a given property is based on Annual Rental Value (ARV) of that property. ARV, in turn, is assessed according to the reasonable prevailing rental rates for similar properties within the same locality. For this purpose, each mohalla, colony, town, road, street, etc. belongs to one of seven assessment categories (A, B, C, D, E, F, and G). The Excise & Taxation Department has created tables showing various rates per square yard for land area, and per square foot for covered area (i.e., buildings), for each category.

There is one table for residential valuations and one for commercial valuations. Within each table, different rates are given depending on whether the property is (a) used by the owner or rented and (b) on a main road (one at least 30 feet wide) or off road. The residential table shows different rates for the first 500 square yards of land area and 3,000 square feet of covered area. The land area rates in the commercial table also change above 500 square yards, and the covered area rates are divided into three as ≤1,500 / 1,501 – 3,000 / > 3,000 square feet.

There are special rules for certain types of properties, but to find ARV for general residential and commercial properties, use the following method:
  1. Multiply the land area of the property by the applicable rate. 
  2. Multiply the covered area of the property by the applicable rate.
  3. Add the above, then multiply by 12 to get Gross Annual Rental Value (GARV). 
  4. Take GARV less 10% to arrive at ARV.

As a simple example, suppose you own and live in a 1,350 square foot residential house on a 200 square yard lot fronting a main road in a Category A locality:
  1. 200 sq yd x 0.40 = 80 
  2. 1350 sq ft x 0.40 = 540
  3. 80 + 540 = 620 x 12 = 7440 
  4. 7440 – 10% = 6696
Thus, your property's ARV is assessed as Rs 6,696.

Property Tax, Sindh, Pakistan

Property Tax in Karachi

Property taxes in Karachi are governed by the Sindh Urban Immovable Property Tax Act, 1958, and associated rules. Section 3 of the Act provides for the collection of taxes based on properties' Annual Rental Value (ARV) according to Section 5. 

Empowered by Section 5A of the Act, the Sindh Government has developed a valuation table which makes it simple to find ARV for a given property. The table separates Sindh's cities, referred to as “rating areas”, into five groups. These groups are themselves divided into four zones depending on local socioeconomic conditions. Different rates are listed for each zone in each group.

The rates are to be applied to the square yardage of a plot of land and the square footage of any buildings (“covered area”) on the land. ARV can be found by multiplying these areas by twelve, adding them together, and subtracting a ten percent allowance for repair and maintenance. Annual property tax is calculated as 25% of this ARV.

Some deductions exist for various specific types of properties, and Section 4 of the Act exempts the following properties from tax altogether:

  • Government-owned properties
  • Properties with ARV of no more than Rs 864
  • Residential buildings on land not over 120 square yards in area
  • One residential space of 600 square feet or less on any floor of a building
  • Libraries, parks, playgrounds, places of worship, orphanages, cemeteries, cremation grounds, etc.
  • Properties owned by widows, orphaned children, and disabled individuals with ARV no more than Rs 48,000
  • Properties listed as protected heritage under the Sindh Cultural Heritage (Preservation) Act, 1994 (except those in commercial use)

Taxes and any penalties relating to a property are generally recovered from the property's owner under Section 16 of the Sindh Urban Immovable Property Tax Act, 1958. However, Section 14 of that Act allows recovery from the tenant of a property as well. Unpaid taxes are also recoverable under the Sindh Land Revenue Act, 1967.

Responsibility for property tax assessment, collection and related appeals is vested in officials at several levels. First, an Assessing Authority in each rating area performs most basic assessment and collection tasks. Above the Assessing Authority is a Director, who also carries out some collection functions, and who additionally hears appeals regarding valuation and other issues. (An appeal may be filed within 30 days of receiving an order from the Assessing Authority.) Finally, the Director General of the Excise & Taxation Department is responsible for hearing appeals against the judgment of a Director (known as revision petitions), which must be filed within one year of such judgment. The Director General may also initiate a review of a Director's decision on his own initiative.