Punjab Pakistan: Time and manner of property tax payment

The Government of Punjab accommodates taxpayers in many ways; a taxpayer can:

1. Pay tax on his property during the first quarter of a financial year at a 5% discount (technically, the discount is a 5% rebate);
2. Pay the tax in any branch of the National Bank of Pakistan throughout the province of Punjab;
3. Pay the tax in any available branch of the State Bank of Pakistan;
4. Pay the tax through a check drawn on a scheduled bank.

The first quarter of a financial year starts on July 1 and ends on October 31 of the same year. The Punjab government has implemented a surcharge of 1% per month on an accumulated basis after October 31. The effective date of the surcharge is July 1, 2012.

Generally, large taxpayers can get their payments turned into easy installments by the Excise and Taxation Officer of their district; however, after July 1, 2012, the payment of tax in installments is financially harmful for a taxpayer as it results in a larger total payment due to the surcharge.

Punjab Pakistan: Exemption of property tax: case of a retired public servant

The Punjab government has provided public servants with an exemption from property tax. The exemption is available for a property which satisfies the following conditions:

1. The construction is one residential house;
2. The total area is up to one kanal;
3. The owner is a retired government employee; and
4. The owner occupies the property for his residence.

The beneficiary may be a retired employee of the federal or a provincial government;

however, a person who was an employee of a corporation owned, established or controlled by the federal or a provincial government does not qualify for the exemption.

(One kanal is equal to 20 marlas or 600 square yards.)

Punjab Pakistan: Exemption of property tax: case of a widow owner

What is the exemption from payment of property tax available to a widow owner of a property?

A widow owner of a property is entitled to an exemption of Rs 12,150 from payment of property tax. This limit is subject to the share of the widow in the property and to the total amount of exemption up to Rs 12,150 out of the tax payable if the tax is more than Rs 12,150.

I am a widow and I still do not have an exemption from payment of property tax. Why?

In most cases, a widow fails to get total exemption from payment of property tax for one of the following reasons:
1.       The widow is not the owner of the property;
2.       The widow is a partial owner of the property;
3.       The tax is more than the exemption limit of Rs 12,150;
4.       The tax is for the period during which the husband of the widow was alive;
5.       The widow no longer has valid title to the property.

Procedure to apply for exemption

1 - Preparing to apply

As a widow seeking exemption from payment of Property Tax, you should note following points before applying for exemption:

1 - You must have a valid title of the property in your name. It means you have proof of ownership of the property for which tax is payable in your name;

2 - If you have only a share in the property ownership, you must have documentary evidence showing yor share in the property;

3 - You must have a CNIC showing your name and your husbands name e.g. name on CNIC may be Zahra W/O Tanveer, or Zahra Wd/o Tanveer; and

4 - You must have photocpies of the above documents before proceeding to the next step.

2 - Writing the application

After getting photcopies of necessary documents. you can proceed to prepare application for exemption as under:

1 - Place the notice of tax demand before you for essential information given on it;

2 - Address the application to the Excise and Taxation Officer;

3 - Write an application on a plain paper demanding exmption from the Excise and Taxation Officer;

4 - Note your property number from the tax demand notice and write it in the application showing property number, ward number, block number, and name of the inspector incharge if avaiable with you;

5 - Prove your status of being a widow by attaching a copy of the death certificate of your husband with the application and mentioning it as enclosure in the application;

6 - Prove your status of being an owner of the property by attaching a copy of the title documents;

7 - Attach a copy of your CNIC with the application; and

8 - Write your contact details for correspondance.

3 - Submitting the application

1 - Affix a Court fee of Rs 4 on the application; and

2 - Submit the application to the Excise and Taxation Office.

Exemption of property tax: case of a retired public servant

Punjab Pakistan: What is PT1 or Form PT1?

What is PT1 or Form PT1?

PT One, PT1, or Form PT1 is a form prescribed under the Property Tax Act of 1958. In fact, it is in the form of a register. The register is prepared from a survey of properties by the Excise and Taxation Department of the government of Punjab. When you need a PT1, you get a copy prepared from this register.

A PT1 identifies a property by a unique number allotted to the property during the survey. Therefore, you need Form PT1 when interacting with an organization which requires the identification and location of a property. Some situations where you need a PT1 are given below:

1. The SNGPL, SSGPL, and WAPDA, while installing a meter at a property, use the PT1 to identify and locate the property; and
2. Banks use the PT1 to identify and locate a property that will be mortgaged.

On a PT1, you can find the property number to identify the property, the name of the owner, the name of the tenant, the area of the property, and the annual rental value of the property, among other things.

You may also like to read:

1- Understanding your PT1 form

2- Can I download my PT1

3- How to obtain your copy of PT-1

Property Tax, Punjab, Pakistan

What is Property Tax?

Property Tax in Punjab, Pakistan

Property Tax is the tax levied under §3 of the Punjab Urban Immovable Property Tax Act of 1958. Property Tax is assessed and collected in rating areas, which are generally urban areas only. You can ascertain its amount if you know the Annual Rental Value of a property: the property's Annual Rental Value is the base of its property tax.

Who collects property tax?

The Excise and Taxation Department, Punjab, Pakistan collects property tax. The Department also performs the following additional functions:

1. Assessing and collecting all provincial taxes except Land Revenue;
2. Enforcing the prohibition of liquor, intoxicants, and narcotics;
3. Enforcing other public health measures designed to suppress and regulate the movements of dangerous drugs and narcotic substances.

What is the scope of property tax?

The Punjab government has levied property tax only on buildings and land within the boundaries of rating areas, which are sizable towns only. For a clear legal definition of “rating area”, one may see §§ 116 and 117 of the Punjab Local Government Ordinance of 2001.

What is the base of property tax?

The property tax base is the Annual Rental Value of a property or land. Property tax is 20 or 25 percent of the Annual Rental Value of a property or land.

You can calculate the Annual Rental Value of a property using its monthly rent or monthly notional rent. For example, if a property has monthly rent or monthly notional rent of Rs 2,000 per month, its Gross Annual Rental Value is Rs 24,000, that is, Rs 2,000 x 12.

The Annual Rental Value is 90% of the Gross Annual Rental Value. It is the amount left when you deduct a 10% rebate for repairs from the Gross Annual Rental Value. For example, if the Gross Annual Rental Value is Rs 24,000, the Annual Rental Value is Rs 21,600: Rs 24,000 minus 10% of Rs 24,000 or Rs 2,400.

It is important to remember that the assessing officer who assesses a property for property tax purposes uses the monthly rent or monthly notional rent to calculate the property's Annual Rental Value. Monthly notional rent is an estimated rent per square foot of building (or per square yard of land).

How can you calculate property tax?

Property tax is 25% of the Annual Rental Value when the Annual Rental Value is above Rs 20,000 and 20% otherwise. For example, if the Annual Rental Value is Rs 21,600, property tax is Rs 5,400.

Who pays property tax?

One important point to note is that the tax is on property, not on a person. However, it is payable by the property owner. The government may collect property tax from the tenant or possessor of a property if the owner fails to pay the tax, e.g. if he is not in Pakistan, willfully avoids payment of the tax or contact with tax collectors, etc.

What measures can the Excise and Taxation Department take to recover property tax from you?
If you have any questions pertaining to property tax, feel free to ask.

You may also like to read:

Property Tax, Punjab, Pakistan: All the roles