which is almost half of the existing rating area of 23,187 acres, helped quadruple CVT collection to Rs62.5 million in the quarter ending September 2015/2016 from a mere Rs15.7 million a year ago.
The increase in CVT revenues in Sheikhupura (GIS experiment district) is far greater than the increase in Mandi Bahauddin (a similar district where there was no GIS intervention). CVT is imposed on immovable property at a rate of two percent of the value of property calculated based on DC notified rates as a fixed levy under the Punjab Finance Act, 2010 and the tax is applicable in urban areas as defined in Punjab Urban Immovable Property Tax (UIPT) Act, 1958.
Punjab has set a target of Rs12.6 billion under CVT during the current financial year, 7.3 percent more than the previous year’s revised estimate. CVT accounts for a little more than a fifth of the total revenues collected by the Board of Revenue over the past few years.
After the successful use of GIS technology in urban area demarcation in Sheikhupura, the provincial government has an opportunity to replicate this exercise across the province for identifying and bringing into the tax net new rating areas.
However, the opportunity has not been fully exploited. When contacted, Asad Islam Mahni, member, BoR (Tax), insisted that the BoR had been extending the CVT rating areas every year.
But he did not elaborate if the BoR had used GIS technology for accurate identification of new urban areas, what the quantum of such an increase in rating areas was, and whether and to what extent it led to increase in CVT collection.
Provincial finance minister Ayesha Ghaus-Pasha maintains that the BoR continues to identify and extend the limits of existing urban areas, in a phased manner, every few years as is provided under the (Punjab UIPT) law. “Besides, we also keep reviewing, upwards, the DC rates of urban land on an annual basis leading to increase in CVT collection,” she said.
Officials claim that the use of GIS technology could help push CVT collection in Punjab by around Rs7 billion in just one year, a major potential source of revenue for the province. “The province has indeed significantly increased its tax revenue in the last couple of years. But the existing tax base remains very narrow, as no tangible effort has been made to expand the number of taxpayers.
The use of GIS technology for redrawing and extending limits of urban areas across the province can potentially add thousands of new taxpayers as has been demonstrated in case of Sheikhupura,” concluded a finance department official.