Tax on Luxury Houses

Luxury house Tax has been imposed by the Government of the Punjab vide Finance Act, 2014 on residential houses situated in the notified rating areas under the Punjab Urban Immovable Property Tax Act, 1958 and Cantonment areas defined under the Cantonment Act, 1924. The luxury house tax shall be charged in addition to the property tax being charged from owners/occupiers of residential houses having specifications given in the table and the liability to pay this tax rests with the owner or occupier jointly and severely.

The tax has to be paid only one time in lump sum on or before September 30th 2014 or in four equal quarterly installments with first installment on or before September 30th, 2014 and the subsequent equal installments being payable on or before the last day of quarter concerned. However, in case of lump sum payment, the rebate of 10% of the tax liability is admissible if the tax is paid before the September 30th 2014 and a surcharge of 1% per month of the amount of tax due will be charged if the tax is paid after the due dates mentioned above.

If a person has paid lump sum luxury house tax under the Punjab Finance Act, 2013 wholly or partially, he may claim adjustment of an equivalent amount from the tax to be paid under the Punjab Finance Act 2014. The residential house with completion of construction before 01-01-2001, or an existing residential house owned by a person on the basis of opening of the inheritance before 1.7.2014, or a residential house or part of it owned by a widow by way of inheritance and being used for her permanent residence will be exempt from this tax provided that if a widow owns more than one residential house liable to tax, she will be entitled to exemption only in respect of one residential house.

The rates of luxury house tax are as under:

Location

 

Category of Residential house

 

Rate of tax

In Lahore district including Lahore cantonment and walton cantonment

 
  • Two canal and above with the covered area more than six thousand  Sq feet.
  • Eight kanals or above with the covered area more than twelve thousand square feet.
 
  • PKR.2,00,000/- per kanal subject to a maximum of PKR.2,000,000/-
  • PKR.3,00,000/- per kanal subject to a maximum of PKR.3,600,000/-
 

In rating area of divisional headquarters district and all the cantonments to the district of the divisional headquarters.

 
  • Two canals or above with covered area more than six thousand square feet.
  • Eight kanals or above with the covered area more than twelve thousand square feet.
 
  • PKR. 150,000/- per kanal subject to a maximum of PKR.1,500,000/-
  • PKR.250,000/- per kanal subject to a maximum of PKR.3,000,000/-
 

In remaining rating areas and cantonments.

 
  • Two canals or above with covered area more than six thousand square feet.
  • Eight kanals or above with the covered area more than twelve thousand square feet.
 
  • PKR.100,000/- per kanal subject to a maximum of PKR.1000,000/-
  • PKR.200,000/- per kanal subject to a maximum of Rs.2,400,000
 

Provided that for calculating tax for an additional areas less than one kanal pro rata rates for each full marla shall be applied and area less than one marla shall be excluded.