Luxury tax outlined for capital’s mansions

Farmhouses built on land measuring up to 4 Kanals exempted

ISLAMABAD: Despite the government’s claims of introducing a “tax-free” budget for the fiscal year 2020-21, it has proposed the imposition of taxes worth up to Rs0.2 million on luxury residential dwellings located in the federal capital.

Besides this, taxes amounting to Rs80 per square feet (sqft) will be levied on farmhouses — corresponding to their covered areas. These taxes will be enforced through Tax Finance Bill 2020 and they were made a part of the federal budget 2020-21 after approval of the federal cabinet.

The interior ministry will be entitled to collect these taxes in Islamabad through its subsidiary departments.

However, these taxes will not apply to properties occupied by widows after it was proposed that such occupants be exempted from the tax.

In the first category of residential units to pay luxury taxes are houses, mansions and other residential units in Islamabad which are spread over two to four kanals of land and have a covered area of more than 6,000 sq ft. such houses will be required to pay Rs0.1 million in annual taxes.

For residential units with a covered area of over 8,000 sqft and sprawling over five kanals of land will have to pay an annual tax of Rs0.2 million.

Further, farmhouses which are built on land measuring up to four Kanals, have been exempted from the luxury tax.

However, those farmhouses which are built on an area more than four kanals have been split into two categories. In the first category, a luxury tax of Rs25 per sqft has been proposed for farmhouses with a covered area of over 7,000 sq ft. Those which have a covered area of 7,001 sqft and up to 10,000 sqft will be charged Rs40 per sqft annually.

It has been proposed to levy a tax of Rs50 per sqft on farmhouses sprawling over an area of over 10,000 sqft.

In the second category, an annual tax of Rs60 per sqft tax has been proposed for farmhouses which have a covered area of 5,000 to 7,000 sqft.

Moreover, an Rs70 per sqft tax has been prescribed for farmhouses with a covered area between 7,001 to 10,000 sq ft and Rs80 tax on farmhouses extending over 10,000 sq ft.

Published in The Express Tribune, June 13^th, 2020.