ISLAMABAD: Nearly 1,200 sprawling farmhouses and big residences located in the Islamabad Capital Territory (ICT) were to come in the net of the aborted luxury tax to contribute approximately Rs500 million to the public exchequer annually.
The Capital Development Authority (CDA) record shows that there are a total of 500 farmhouses in the surroundings of the federal capital and 610 luxury dwellings in different sectors of Islamabad which would have come in tax net had the new tax proposed in the federal budget not been withdrawn during its final passage in the National Assembly. These premises don’t include a number of farmhouses, which, though located in the ICT, don’t fall in the CDA-approved housing schemes.
The Interior Ministry had proposed the luxury tax that it, according to the Federal Board of Revenue (FBR), withdrew during the approval of the budget. It suggested that the new tax would be collected by the excise and taxation department of the ICT.
Among others, the CDA also opposed the imposition of the luxury tax pointing out that the civic body/Metropolitan Corporation Islamabad (MCI) is already charging property tax from the farmhouses and large residences.
In a letter to the Interior Ministry, the CDA said that the directorate of revenue of the CDA/MCI is collecting property tax within municipal limits of the federal capital. It said that the luxury tax would be in addition to that. It noted that the property tax within the ICT was imposed during 1991 with the approval of the federal government whereas a similar tax on agro-farms was introduced in July 2019 after approval of the House of Local Government of MCI in terms of Section (88) of the Local Government Act, 2015.
The letter emphasized that the directorate of revenue is collecting property tax from the prescribed farmhouses and residences in G-6, E-7 and F series, and located along the Murree Road, Chak Shahzad and near Sihala.
Apart from the CDA’s opposition, many owners of the expansive farmhouses also rejected the luxury tax dubbing it as discriminatory on the ground it was being introduced only in Islamabad and nowhere else in Pakistan.
The present and former MPs and others belonging to different political parties, who own farmhouses in Orchard Scheme and other suburbs of Islamabad, include Senator Talha Mahmood, former Senator Abbas Afridi, Dr Tariq Fazal Chaudhry, the family of late Makhdoom Amin Fahim, the brother of Raja Pervez Ashraf, former chief of Pakistan Baitul Mal Barrister Abid Sheikh, the famous Saifullah family (three farmhouses), former Senate chairman Waseem Sajjad, Senator Dr Shahzad Wasim and former senator Anwar Beg besides senior lawyers Iftikhar Gilani, Shaikh Akram and Syed Ali Zafar.
The cabinet who also own farmhouses include Azam Swati, Babar Awan and Dr Sania Nishtar (One Chak Shahzad). Other owners of Chak Shahzad farmhouses are Gen (R) Pervez Musharraf, Gen (R) Zubair Hayat, Lt Gen (R) Naveed Mukhtar, Lt Gen (R) Sajjad Ghani, Gen (R) Ihsanullah, Air Marshall (R) Abbas Khattak, and Maj Gen (R) Dr Azhar Mahmood Kiyani. Prime Minister Imran Khan’s farmhouse is located in Banigala.
The CDA provided to the Interior Ministry the details of the property tax being already charged on big houses (spread over one to five kanals or above) and farmhouses. It said that for G-6 sector plots, the tax rate is Rs10/sq ft of the plot area and Rs12/sq ft of the covered area. It is charging Rs12/sq ft of the plot area and Rs15/sq ft of the covered area in E-7 sector. The CDA is getting Rs2/sq yd of the total area and Rs6/sq yd of the covered area of agro-farms.
However, it has granted exemption to the widows on the basis of statutory provisions - residential house, flat or apartment belonging to the widow if she owns no other built-up property anywhere in Pakistan. The exemption is also available to widow’s minor sons and unmarried daughter after her death.
According to the retracted proposal of the Interior Ministry incorporated in the 2020-2021 federal budget, luxury tax of Rs100,000/kanal was recommended for a residential house of two kanals to four kanals with covered areas of more than 6,000 sq ft. Levey of Rs200,000/kanal was suggested for a house of five kanals or above with a covered area of more than 8,000 sq ft.
Tax of Rs25/sq ft of the covered area was proposed for a farmhouse of four kanals including the area under farming, having the covered area between 5,000 sq ft to 7,000 sq ft. A farmhouse with covered area between 7,001 sq ft and 10,000 sq ft was imposed Rs40/sq ft tax on the covered area. A farmhouse with a covered area of 10,000 sq ft was to pay Rs50/ sq ft of the covered area.
A farmhouse of more than five kanal including area under farming having covered area between 5,000 sq ft to 7,000 sq ft was recommended to pay Rs60/sq ft of the covered area. A farmhouse with covered area between 7,001 sq ft to 10,000 sq ft was imposed Rs70/sq ft of the covered area. A farmhouse with a covered area of more than 10,000 sq ft was levied Rs80/sq ft of the covered area.