Property Tax in Pakistan 2021-22

Property Tax:

The property tax is an amount of money that is imposed on the property. It is imposed by the governing authority of the jurisdiction in which the property is located. The governing authorities can be a national government, a federated state, a county or geographical region, or a municipality. Regularly, a property tax is imposed on real estate. It may be imposed annually or at the time of a real estate transaction, such as in real estate transfer tax. This tax can be compared to a rent tax, which is based on rental income or charged rent, and a land value tax, which is a tax on the value of land without the value of buildings and other improvements.

The withholding tax is a combination of Capital Gain Tax and Capital Value Tax. It is the amount that is paid by both the buyer and the seller. It is paid when the property is finally sold If the property is filed on income tax by the buyer, it remains 2%, but if the buyer is a non-filer, the tax rises to 45%. 

Who is Exempt from Paying withholding Tax on Property?

The points are given below to show tax exemption:

• The yearly rent of property cannot exceed PKR 4,320, it is tax-free. 

• The property, including buildings and homes which are possessed by widows, orphans, or disabled persons with up to PKR 12,150 per year, are exempted.

• A single only house with only PKR 6,480 rent, which is also occupied by the owner for residence, makes its way to tax-exempt.

• A residential house on a land area less than 5 Marla, which is also not a category ‘A,’ enjoys the tax exemption.

• A single property owned by a government servant either retired with up to 1 Kanal is exempted.

• The buildings are possessed by the government or local semi-government authorities, i.e., Corporation, Welfare Centre, Municipality, or town committee.

• The parks, schools, hospitals, boarding, and libraries are tax exempted.

• If any property’s rent is dedicated to the religious or charitable institution, it stands as tax-free.

• The mosques and religious areas don’t come under the tax.

How You Can Pay Your Taxes

There are three easy ways you can pay property taxes in Pakistan those are:

1. Tax Collection Department

Tax collection offices are set up in every provincial area of Pakistan where taxes are collected. You can easily pay your taxes by contacting the tax department of your respective area and pay your taxes following the procedure advised by them.

2. Tax Collection via Banks

The easy way to pay your tax in Pakistan is through banks. For this, you have to visit your nearest bank, generate an online property tax challan and pay your tax amount.

3. Online Banking System

As we all know things are getting easy day by day due to advanced technology. The online banking system has made it possible to pay your taxes from anywhere, anytime. One of the easiest ways through which you can pay your tax effortlessly. You can make online payments through online banking systems from the comfort of your own homes. You do not have to step out of your home, a single click does the job, it’s that simple.

How to calculate your tax?

The Government of Pakistan, in this regard, has introduced a site, by getting its access you can calculate the exact taxable amount for the benefit of property owners. Now you can calculate the tax by just entering the details.

Regardless of what kind of property you owned, whether it’s more or less, one should stand as a responsible citizen and pay their tax on time. Being Responsible towards the state is the first sign of your integrity. The responsible citizen remains accurate about their tax details without avoidance. This is an act that builds the economy of the country. If we have a look at real estate, people like to buy plots and homes in different private societies for their comfort and luxury but here tax is for your comfort and public responsibility which must be ensured.

The tax applies to all private/government property buyers and sellers. Thus, if you decide not to pay it, strict action as per law can be initiated against you by the FBR. The government has made it easy to calculate your tax and possession of property law in Pakistan to pay within a due time via banks, tax departments, or online transfers So, now we need to show responsibility as well.

KEY POINTS

• Property owners pay property tax calculated by the local government where the property is located.

• Property tax is based on the value of the property, which can be real estate or also tangible personal property.

• Some types of properties are exempt from real estate taxes. These include qualifying nonprofit religious and government properties. Senior citizens, orphans, widows, disabled, etc are also exempted.