The Punjab Excise, Taxation and Narcotics Control Department (PETSCD) has approved a new property tax formula that will base tax amounts on the official prices set by Deputy Commissioners (DCs) for all types of property transactions across the province. This new tax structure is set to take effect on January 1, 2025.
Under the new system, property taxes for both commercial and residential properties will be determined according to the DC rate, replacing the current method based on the department’s own assessment values.
Until December 31, 2024, property taxes will continue to be issued under the existing valuation system.
The new formula is expected to increase property tax revenue from residential areas across districts. However, it may lead to a significant reduction in tax revenue from commercial properties, as DC rates are typically 20% to 40% lower than market values in commercial areas.
Sources within PETSCD have indicated concerns that the new tax formula could lead to a shortfall in the property tax target, particularly for commercial properties where payment rates have historically been high, reaching up to 90%. In contrast, the domestic property tax collection rate has been declining annually.
To mitigate potential revenue losses, property tax inspectors have been instructed to meet their tax collection targets by December 31. Taxpayers who fail to pay their property taxes by this deadline will have their taxes reassessed and billed under the new formula starting January 1, 2025.
