New tax burden placed on rented properties in Punjab

LAHORE: Punjab has imposed a 16 per cent General Sales Tax on rented properties across the province, including Rawalpindi district, with the new levy set to take effect from July 1, according to details reported on the latest changes in the provincial tax regime.

Under the new arrangement, all rented non-residential buildings and immovable properties in Punjab will be subject to the 16pc GST. The tax will also cover smaller houses rented out by their owners. In addition, taxpayers who were registered before January 1, 2025 will receive a 20pc cap on capital value assessment under the property tax system.

The changes also include a 5pc rebate for those who pay property tax under the self-assessment scheme. Punjab has further shifted property tax payments to the E-Pay Punjab electronic payment platform. If dues are not cleared, surcharges will be added every three months along with the original tax amount. The surcharge amount will rise annually on October 31, January 31, April 30 and July 31.

The measure has prompted criticism from both citizens and property market representatives. Members of the Property Dealers Association rejected the tax, calling it unfair. Association Secretary Naveed Ali said the excise department was already collecting taxes on rented commercial and residential properties and argued that the additional GST should not be imposed.

Residents also objected to the move. Citizens Nasir Khan and Amjad Ali Shah said the government was taxing every possible sector and called for the levy to be withdrawn. They said many pensioners invest their savings in a house to earn rental income and maintained that placing GST on such properties was unjust.

Separately, the government has also raised token tax on commercial transport vehicles, including vans and trucks, as well as on vehicles with engine capacities of 1,000cc and above, as part of efforts to increase revenue collection.