KARACHI, May 31 The Defence Housing Authority has imposed a new tax on plot owners in the DHA under the head of 'Refurbishment Charges', and expects to generate between Rs3-4 billion from the owners of over 27,000 plots in the seven phases of the housing authority.

The new tax is being collected in order to pay for the installation of new drains along the roads of DHA, which took place last year, and analysts believe the DHA is following the CDGK's lead after it imposed an 'infrastructure tax' in order to generate revenue.

According to sources, the rate of the new tax ranges from Rs150 per square yard to Rs1,000 per square yard, depending on which category a plot of land falls under. In some cases, the rate of the tax is greater for open plots than it is for plots upon which there has been construction, even though it is constructed plots which are making greater use of the DHA's facilities.

While the DHA expects to recover up to Rs4 billion through the 'refurbishment charges', at the moment officials say they are uncertain as to how much they will actually be able to collect, as the charges are currently being collected from plot owners who approach the DHA for other property-related work.

The sources said plot owners will be paying huge amounts for the “inefficient planning” of the DHA, as no drainage system was put in place when the housing scheme was first being planned, owing to which major portions of the area remained submerged during the yearly monsoons in subsequent years.

They said that major portions of the DHA were often flooded during rains due to the non-existence or non-functionality of the stormwater drainage system, road side drainage system and water drainage outlets for large scale flooding.

The sources added that the DHA had not informed property owners that the tax would be imposed at the time that the drainage system was being installed almost a year ago, and was now sending out letters for collection of refurbishment charges.

They said that owners were likely to be shocked when they visited DHA offices regarding lease, mutation or other property-related work, only to find that without the payment of the new tax, none of their work would be done.Further, the sources said the tax was being collected in order to pay for the newly installed drainage system, where drains had been installed along the centre of major roads in the DHA. They said this system had not been seen anywhere else in the world, and, when approached, DHA officials said drains had been laid in the centre as no space had been left on the sides of the roads by the original planners.

In fact, the ceilings of the drains have proven to be a source of concern for motorists, who fear that they may collapse. Indeed, at a recent press briefing, DHA administrator Brig Khalid Tirmizi conceded that some portions had in fact caved in, but would be reconstructed by the contractor soon.

Collection plans appears haphazard

The sources said that in certain cases less tax would be collected from owners of constructed plots as opposed to those of open plots in the same category.

Citing an example, they said that refurbishment charges of Rs23 per square foot (roughly Rs207 per square yard) was being imposed on constructed commercial plots, while roughly Rs83 per square foot (Rs750 per square yard) was being charged on open commercial plots. They questioned why a lower tax rate was being applied to constructed plots, when it was they who actually used the DHA's systems.

Responding to Dawn'squeries, a DHA spokesperson said that the DHA had spent Rs3-4 billion on laying a new drainage system and on other infrastructure in Phases I to VII, so the refurbishment charges at the rate of Rs150 per square yard for residential plots, Rs750 per square yard for industrial plots, Rs1,000 per square yard for amenity plots and Rs750 per square yard and Rs23 per square foot for commercial open and constructed plots respectively had been imposed from April 15 on the directives of the DHA governing body. The charges have to be paid by all members in four half-yearly instalments, and intimation letters were being sent to the residents. The DHA has 27,241 plots in its seven phases.

According to the DHA spokesperson, the charges would mostly be recovered at the time of transfer/mutation, submission of completion plan or application for registration/execution of “B” or “C” lease, if not done earlier. A surcharge of 12 per cent will also be levied after the expiry of the stipulated period of payment. He said that the amount to be recovered depended on the “cooperation and number of people who turn up for payment of dues and it would also be governed by the market dynamics, as more transactions of plots will imply greater guaranteed recovery of refurbishment charges”.

The DHA failed to respond to a number of specific questions raised by this reporter regarding the new tax and the original planning of drainage for DHA. These questions included specific queries on which organisation had done the planning for the system, and who had approved the planning; whether any action had been taken against those who implemented the faulty system; why new drains had been laid in the centre of roads and whether such a system was recognised as an effective measure anywhere else in the world. Further, DHA officials refused to comment on whether objections/comments were sought from DHA residents before imposing the refurbishment charges, and whether people were informed when they first purchased properties that the refurbishment charges would be imposed later.

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