November 10, 2006	Friday	Shawwal 17, 1427

KARACHI, Nov 9: Instances of harassment by the property tax officials have come down following a formula reached between the department and representatives of industry in different industrial estates.

There are, however, complaints of wrong assessment of tax by the inspectors. The department maintains that most of such issues are amicably settled when the complainant approaches the directorate of Property Tax of the Sindh ministry of Excise and Taxation.

Towel Manufacturers Association (TMA) Chairman Syed Muzammil Husain told Dawn on Thursday that under the formula tax on factories was assessed at the rate of 70 paisa per sq ft for both the total land area and the covered area. “The owner has to pay 20 per cent of the amount calculated on the basis of this formula and a rebate of 10 to 20 per cent is also allowed on old buildings,” he elaborated.

Site Association of Industry (SAI) Chairman Ameen Bandukda said that there were complaints of over assessment of tax from industrial units despite understanding reached over a tax formula.

Director Property Tax Shabir Ahmed Shaikh admitted that there were cases of wrong assessment. He blamed some mill owners who did not bother to complete documentation required for the property tax after completion of the buildings. “This gives a chance to the tax inspectors to assess the unit according to their own judgement”.

The tax challans are now regularly delivered in August. This is in contrast to the past practice when the owners were asked to collect the challans from the department. This resulted in piling up of tax amounts for several years which provided a chance to the tax personnel to visit the premises and bargain with the owners for reducing tax amount at the cost of the national kitty.

The ministry of excise and taxation collected Rs1,300 million in the fiscal year 2006 on account of property tax. Collections in the first quarter of FY07 stood at Rs540 million which is Rs33 million higher than the previous quarter.

There are an estimated 0.8 million property units in Karachi paying tax at a rate vary with the localities. According to the statistics obtained from the directorate of property tax, industrial and commercial units account for 50 per cent of the total tax collections followed by residential units with 20 per cent.

The tax rate for the residential and commercial units differ at a ratio of one is to 10. The tax rate for Clifton area is Rs5 per sq ft (commercial) and 50 paisa for residential; followed by PECHS Rs4 and 50 paisa; Gulshan-e-Iqbal, Federal B Area and North Nazimabad Rs3 and 30 paisa and Landhi, Korangi, North Karachi, Liyari etc., Rs2.5 and 20 paisa.

The tax rates have not been changed since 2001 as according to the official the government did not want to burden the citizens. Under this policy it exempted units owned by windows and retired servants from tax. There is also a general tax amnesty for owners of units of up to 120 sq yards and flats with covered area up to 600 sq ft. There is a special concessional tax rate for hospitals, schools, clubs, parks and places for entertainment.

A plan is on the board to computerise tax records and collections in all the 22 tax divisions in the city. The automation would greatly help in increasing the tax revenue by plugging leakages.

The Directorate of Property Tax constitutes special teams to visit the premises defaulting in tax for several years and persuade the owners to clear their tax arrears. In serious default cases the owners are detained at the directorate till they agree to clear dues.