Tax is undoubtedly one of the most important sources of revenue for every country in the world. Divided into four provinces, Pakistan has authorized each province to devise its own mechanism regarding tax collection for movable and immovable properties. However, tax rates applied on immovable properties are approved by the higher officials of the federal government and are in accordance with the Sindh Immovable Property Act 1958. The rate of tax imposed is based on the type of the property and its estimated annual rent.
Determination of the Annual Value of Property under Section 5-A
Ascertaining the annual value of property in Sindh might not be as easy as it sounds. However, in order to decrease the level of complexity in this concern, the government of Sindh has devised a simple and easily understandable method. According to the official procedure, the valuation table for properties found in different localities across Sindh is issued according to the section 5-A of the Sindh Urban Immovable Property Tax Act, 1958, as cited by the official website of Excise. To get done with the property valuation in a much simpler manner, all of the cities in the province of Sindh have been classified into five groups and these are further divided into four zones depending on the socio-economic conditions of the localities within them.
Calculation of Tax based on the Annual Value of a Property
Properties found in different regions/zones of Sindh have different rates. In addition, a lot of other factors are taken into consideration while determining the annual value of a property and the amount of tax that is levied by the legal authorities. As per the law, the property tax in Sindh charged on a particular land or building is equivalent to the 25% of its annual value. In order to calculate the annual value of the property, the concerned authorities have derived the following formula.
- Plot Size x Rate (defined by zone/area) x 12 (months in a year)
- Covered Area x Rate (defined by zone/area) x 12 (months in a year)
Annual Value of Property = (A) + (B) – 10% Allowance for Maintenance & Repair
Filing Appeal/Petition against Any Particular Property Regulation Imposed
Disagreement and reservations about a particular regulation pertaining to the taxation department is a common case. In this concern, there is a proper channel for individuals through which they can file an appeal or a revision petition addressed to the Director or the Director General of the Department of Excise and Taxation in Sindh. According to the law, the appeal should be filed within 30 days and the revision petition must be filed within a year’s time.
Duties Performed by Prescribed Authorities
Property taxation in Sindh, just like any other place in the world, requires precision and care. The department governing all matters related to the implementation, imposition and exemption from property tax and its related principles comprises several layers of authorities. According to the official website of Excise and Taxation Department in Sindh, below are the three most important authorities that exercise several powers and duties.
Assessing Authority: Based on the area it has been prescribed to work upon, every Assessing Authority is usually authorized to make use of its duty and power for the assessment and collection of the tax as prescribed by the Act.
Director: This position is responsible for the collection of tax and also has the authority for the insertion or omission of entries in the valuation list pertaining to any particular matter that comes under the Section 10(1-A) of the Property Tax Act.
Director General: It is one of the most authoritative positions in the Department of Property Taxation and is responsible to hear the revision petition. It also has the right to take action without any prior notice regarding the appeal made against the order or regulation imposed by an authority sub-ordinate to it.
The Phenomenon of Government Dues Recovery
According to Section 16 of the Act, Sindh government reserves the right to recover outstanding dues/penalty against a particular property from the landlord. However, according to the Section 14 of Property Tax Act, the dues can also be recovered from the tenant by the property owner, according to the annual value of the unit for which both the parties have undergone tenancy agreement. All the unpaid taxes against properties in any area of Sindh are recoverable according to the land revenue act.
Which Properties Are Exempted From Property Tax in Sindh?
According to Section 4 of the Sindh Property Tax Act, there are a few kinds of properties in Sindh that have been exempted from tax collection. Most of these properties are usually government buildings and state-owned offices that are used for public services. Below are the types of properties that don’t entail a property tax:
- Any property either a building or land that is owned by any institution belonging to Local, Provincial or Federal Government, specified for the public purpose
- A building that is built on a plot that is not more than 120 sq yds in size and is being used for residential purposes
- Any building, land or a particular portion of a property that is being used exclusively for the facilities like public parks, playgrounds and libraries. Places of worship and charity organization, orphanages, burial grounds and other places specified for the disposal of human corpses are exempted from imposition of property tax in Sindh.
- An apartment/flat that is in domestic use and does not exceed the covered area of 600 sq ft located in a residential building
- Any building or land, the annual value of which does not in any way exceed the amount of eight hundred and sixty-four rupees
- A property having the annual value not more than forty-eight thousand rupees that is in possession of widow, orphans that are under eighteen years of age and people who are permanently disabled
- The condition of exemption from Property Tax in Sindh is also applied to buildings and sites that have been declared historically significant according to the Sindh Cultural Heritage (Preservation) Act 1994
It is the duty of every citizen living in this country to pay taxes against the properties in Sindh they own as it’s vital for the stability of Pakistan’s economic prosperity.