LAHORE: The Punjab Excise, Taxation and Narcotics Control Department (PETSCD) has approved a new property tax formula that will be implemented starting January 1, 2025.
Under this new system, commercial and domestic property tax will be finalized based on the official prices fixed by the Deputy Commissioners (DCs) for property purchases and sales across the province.
This new formula is expected to benefit the taxation of residential properties, as the DC rates will be used. However, it will also result in a significant reduction in tax revenue and rates for commercial properties.
This is because the DC values are 20-40% lower than the actual market values for commercial areas, which each have their own unique market conditions.
Sources within the PETSCD have expressed concern over the risk of the property tax target being reduced due to this new formula. Currently, the commercial property tax payment rate is high, up to 90%, but the domestic property tax rate has been decreasing each year.
In an effort to mitigate the potential revenue decline, all property tax inspectors have been instructed to achieve the tax target by December 31, 2024. Taxpayers who fail to pay their property taxes by this deadline will be subject to the new formula starting January 1, 2025.
