The Punjab Excise, Taxation, and Narcotics Control Department (PETSCD) has announced a new property tax formula that will take effect on January 1, 2025.
This updated system will set property taxes for both commercial and residential properties based on the official rates established by Deputy Commissioners (DCs) for property transactions across the province.
While the new formula is anticipated to improve the taxation system for residential properties by aligning it with DC rates, it is expected to lead to a notable decrease in tax revenues and rates for commercial properties. This is because the DC values for commercial properties are typically 20-40% below their actual market values, which vary significantly between different commercial zones.
PETSCD insiders have voiced concerns about a potential shortfall in property tax revenues due to the reduced commercial property tax rates. Currently, the collection rate for commercial property taxes is high, reaching up to 90%, whereas the rate for residential taxes has been declining annually.
To address potential revenue losses, property tax inspectors have been directed to meet their tax collection targets by December 31, 2024. Property owners who do not settle their taxes by this date will be subject to the new tax formula beginning January 1, 2025.
