Property tax: Five-marla houses expected to be brought into tax net

Excise dept intends to send proposal to govt once again during the current FY

LAHORE: The Excise Taxation and Narcotics Control Department (ETCD) plans to propose a property tax on five-marla houses, The Express Tribune has learnt.

Earlier this year, the ETCD proposed to the Punjab government that property tax should also be imposed on five-marla houses.

Real estate investors make hefty profit despite new taxes

Sources said that since the government wanted to avoid imposing new taxes in the budget, it turned the proposal down. The excise department, however, has decided to send a fresh proposal to the government.

Initially, the excise department had kept five-marla houses out of the tax net due to their low revenue generation, although owners of five-marla houses in some upscale areas were being taxed. Now, the excise department plans to increase its annual revenue by Rs800 million by bringing all five-marla houses into the tax net.



A senior government official told The Express Tribune that the excise department should not put a further burden on low-income people as people were already paying a lot of direct and indirect taxes.

Property dealer Muhammad Ali, who works in Sabzazaar, said that the government should not tax people with low-income. Most people, who belong to middle and lower middle class families, own five-marla houses, he said, adding that renting out such houses was not a lucrative business.

ETCD Director General Akram Ashraf Gondal said that if people could pay tax on renting of six marla house in smaller cities in Punjab, they could pay taxes on five-marla houses in larger cities as well. He reiterated that five-marla houses in upscale localities were already in the tax net and that the property value of a five-marla houses is far more than what ‘lower-middle class’ people could afford, implying that the owners of such houses should not be classified as low income.

Pakistan's property boom is here, but is it here forever?

Akram said that if a house worth Rs6 to Rs10 million could be rented out, the owner of the house could pay tax as well.

During FY-16, the ETCD generated Rs8 billion from different types of taxes, whereas for FY-17 they would generate Rs9.5 billion, he said.

The excise department was generating approximately Rs200 million from property tax of five-marla houses in posh areas, whereas, they hoped to collect almost Rs800 million from similar houses in other parts of the province if they are allowed to collect the tax. He added that there were around 100,000 five-marla units that could be brought into the tax net.

Published in The Express Tribune, June 23^rd, 2017.