RAWALPINDI: The Military Lands and Cantonments (ML&C) has issued guidelines to cantonment boards throughout the country to improve residential tax collection system which formed 35pc of its income.

The Military Lands and Cantonments issued a letter, available with Dawn, to all the cantonment boards, in which it stated that house tax was one of the main sources of income for the cantonment boards.

Almost Rs9 billion had been collected from the residents which amounted to over 35pc of all taxes collected by the civic bodies under different heads, the letter said.

Under Section 64 (a) and 64 (b) of the Cantonment Act 1924, the cantonment boards were empowered to collect house tax (property tax). However, it had become evident through a study conducted at the ML&C with input from all regional headquarters and cantonment boards that there were some glaring anomalies in assessing house tax which needed to be improved.

Letter states variation, discrimination in taxation on properties witnessed which required correction

It stated that huge variation and arbitrary discrimination in taxation on properties located in the same areas had been witnessed which required intervention and correction.

Properties with the same plot size and covered area situated in the same locations had different taxation, and this pattern was quite consistent in almost all cantonment boards, the letter said, adding that this state of affairs was not healthy and institutions like cantonment boards should exhibit justice, fair play, transparency and uniformity to earn respect and goodwill of the residents.

It said data of all cantonment boards was analysed and they were also asked to calculate on their own for verification purpose in order to arrive at a suitable decision with respect to all civic bodies.

“The verified data suggested that if the property tax is calculated on the basis of section 64(a) of Cantt Act, 1924, the amount of taxation @ 15pc of assessment of residential property becomes too high and unpayable by most of the residents. The cantonment boards, after acknowledging this ground reality, gave huge rebates -Lahore (70pc) and Abbottabad (85pc) -to self-occupied house tax units. The cantonment board in Clifton calculated land component at 67pc rebate while the board in Walton slashed bills of posh localities by 67pc,” the letter said.

Other cantonment boards are giving huge rebates but through undue discretion of staff or assessment committees. In some boards, tax collected from residential properties was less than 2pc whereas notified rate of taxation was 15pc of the annual rental value.

As per guidelines, the cantonment boards will charge tax equal to annual rental value of the property. The annual rental value is to be calculated through the total cost of land, construction cost, covered area and approved building plan.

The letter called for forming an assessment committee which comprised people of known integrity. It is not necessary to have cantonment board members as members of the assessment committee as per provisions of the Cantt Act, 1924.

A senior RCB official told Dawn that the new guidelines had been received and they would be presented before the board meetings and would be implemented after their approval.

Published in Dawn, September 6th, 2022