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.