Are you planning to buy a new property in Pakistan? Then you must be aware of property tax in 2025 and ensure your compliance. In this blog, we will discuss the property tax in detail and explore its new updates in 2025. Property tax in Pakistan is a provincial tax levied on the annual rental value of residential or commercial property, based on the the Urban Immovable Property Tax Acts of the provinces.
What is A Property Tax?
Property tax in Pakistan is a provincial tax levied on the annual rental value of the property. Tax rates are different for every province in Pakistan. It is a percentage of the annual rental value of the flat rate. Rental value does not mean that the property has to be rented out; it gives an assessed value by the government of how much rent would be generated. There are various types of property taxes, such as capital gains tax (CGT), capital value tax (CVT), stamp duty, and withholding tax or advance tax.
According to the Excise Taxation and Narcotics Control department, the property tax is levied at the rate of 5% of the annual value, at which the property may be let out on a year-to-year basis.
Overview of Excise Taxation and Narcotics Control Department
Excise Taxation and Narcotics Control Department provides services for the collection of various taxes. It duties effectively and also suggests ways for additional resource mobilization in the province.
Its top priorities are the creation of a taxpaying culture and also providing fasciitis to the general public in payment of taxes other than building up taxpayers’ confidence.
Procedure for Property Assessment
Assessment of the properties is based on the type of property and nature of the occupation. Locality-wise yardsticks for residential and commercial, rented or self-properties are prescribed by the government. The annual value of the property is calculated through these yardsticks and based on the annual value of the property units, the property tax is charged.
Time and Mode of Paying Property Tax
The property tax may be deposited on or before the 30th day of September with a 5% rebate of tax for the current financial year, like 2025. Payment time is 30 days from the date of serving the Demand Notice with the Challan Form. This tax is deposited into the Treasury or State Bank or in the specified branches of the National Bank of Pakistan. Payment can be made via Challan Form with a check drawn on the scheduled bank.
Who is Exempt From the Property Tax?
Residential houses constructed on a land area less than 5 Marla other than the locality of category A. If the property is not capable of commanding annual rent exceeding PKR. 4320. A single house occupied by the owner for residence, not commanding annual rent exceeding PKR. 6480/.
The buildings owned by minor orphans or disabled persons, the widow’s tax liability of which is up to PKR 12150/- annually, are exempt. Federal or provincial retired government servant owning and occupying one residential house up to one Kanal.
Buildings owned by the government or a local authority like a municipality, Corporation or town committee. Religious buildings like mosques are exempt from property tax. Lands and buildings are used as playgrounds, public parks, boarding schools, hostels, houses, libraries, and hospitals. Properties of which the rent is exclusively devoted to public charitable institutions or religious buildings.
Recent Update About Property Tax Reforms
According to the recent update, the Punjab Excise and Taxation Department has unveiled reforms in the property tax system aimed at improving standardisation and transparency, following the provincial cabinet’s approval.
Director General Excise and Taxation Umar Sher Chattha stated that the reforms include property tax assessments based on exemptions for residential properties up to Rs 5 million. Existing taxpayers will not face any other liability this fiscal year. New taxpayers will be needed to pay only 25% of their total tax amount.
The department introduced a self-assessment system for citizens’ facilities and made it easy to calculate their property taxes.
The government’s decision to exempt non-filers from taxes on property purchases worth up to 10 million has been praised by the Association of Builders and Developers of Pakistan (ABAD). This exemption is expected to stimulate growth in the real estate market.
Rebate and Surcharge
A rebate equal to 5% of the annual tax amount for the financial year is allowed if the amount of annual tax is paid in a lump sum on or before the 30th of September of the financial year.
A late payment surcharge at the rate of 1% of the gross payable tax will be imposed on the first day of every month of delay if the tax payment is not cleared by the 30th of September of the financial year.
Wrap Up
Understanding property tax in 2025 is important for property owners and real estate developers. However, the tax system has become more streamlined and also offers self-assessment options and exemptions for transparency. These tax updates ensure that you are compliant enough and also boost real estate investments. Whether you are purchasing a new property or selling it, staying informed about the tax policies will help you to make strategic decisions. Before taking any step, you must consult real estate attorneys or legal advisors. However, partnering with the best real estate developers will help you to make informed decisions.
