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.