Farm House Tax and Highway Property Tax in Punjab: Rs 10 a Sq Ft and 5 Percent

Punjab has two property taxes that apply outside city rating areas. A farm house of 5,000 square feet or more pays Rs 10 to Rs 20 a square foot a year. A building beside a national or provincial highway or motorway pays 5 percent of its annual taxable value. Both are listed on the Excise Department's own pages, which we read on 11 October 2026.

Owners in the countryside often assume property tax is a city problem. It is not. If you built a large farm house on the edge of Lahore, or you own a shop or a petrol station beside the Motorway, one of these two taxes may apply to you.

The farm house tax covers large farm houses outside city limits

Punjab levied the farm house tax through the Finance Act 2011. It applies to farm houses outside the existing rating areas of property tax. A "rating area" is an urban area where the normal property tax is already charged. So the farm house tax is for houses that sit beyond that line.

A house is taxed only if it meets all three tests on the department's page.

1. The total area is four kanals or more, including the land under farming.
2. The covered area is at least 5,000 square feet.
3. It was constructed after 1980.

Miss any one of the three and this tax does not apply. A farm house built in 1978, or one with a covered area of 4,000 square feet, falls outside it.

The farm house rate rises with the covered area

The tax is charged each year on the covered area, in rupees per square foot. The rate climbs in three bands.

The example bills are our own arithmetic, multiplying the listed rate by the covered area. The department's page does not publish a worked example. Note the jump at the band edge. A house of 7,000 square feet pays Rs 70,000, while one of 7,001 square feet pays Rs 105,015. That is why you should measure the covered area carefully, and keep the approved building plan to prove it.

The highway tax is 5 percent of the taxable value

The second tax is on properties other than agricultural land that stand beside a national or provincial highway, or inside the area of a motorway, outside the rating areas of Punjab. The rate is 5 percent of the annual taxable value, in such limits and lengths as the Punjab government notifies.

"Annual taxable value" means the value of a distinct property unit, leaving out machinery. It is the base used for property tax assessment under the Punjab Urban Immovable Property Tax Act 1958. If a roadside shop has an annual taxable value of Rs 1,000,000, the tax is Rs 50,000. That is our arithmetic, not a department example.

The department's page says the tax is due from the owner or the occupant, jointly and severally, on top of any other tax. It is also "the first charge upon the property unit". That wording means the tax has priority over other claims on the property, which matters when you buy.

Some owners are exempt from the highway tax

The page lists three exemptions.

• Buildings and land with an annual taxable value up to Rs 500,000 that belong to a widow, a divorcee, a disabled person, a minor orphan, or an unmarried female orphan up to age 25.
• Property owned by the federal or provincial government.
• Property used exclusively by the public for worship.

The government may also exempt a property, a person or a class of properties by Gazette notification. We did not find such a notification on the page, so we cannot say whether any is in force today. Ask the excise office before you assume you are exempt.

What we could not find on the department's pages

Two gaps matter. First, the page does not say which stretches of highway are covered. It leaves the limits and lengths to a government notification, and we did not find the list online. Second, neither page gives a payment date, a rebate or a recovery process for these two taxes.

So we cannot tell you how a bill reaches you or when it is due. If you own a roadside building or a large farm house, ask your local excise office whether your unit is on the list. Do this before you buy, too. A buyer who takes a property with unpaid arrears may find the arrears follow the property, because the highway tax is a first charge on it.

Check a property before you buy or build

1. Decide whether the property is inside or outside a rating area. Ask the excise office or check your property tax record.
2. If it is a farm house, check the three tests: four kanals total, 5,000 square feet covered, built after 1980.
3. If it faces a highway or motorway, ask whether the stretch is notified and whether the unit is assessed.
4. Ask for proof that earlier dues are paid, in writing.
5. Keep the approved building plan and covered area measurement.

Buying land involves more than tax. Our property registry verification guide covers the ownership papers, and the guide on checking the FBR property valuation shows how the value used for federal taxes is set. For a very large city house, the separate luxury house tax in Punjab may apply instead.

Common questions

Who pays the farm house tax in Punjab?

The owner of a farm house outside the property tax rating areas that meets the size and age tests. The page does not name the occupant for this tax.

What is the minimum size for the farm house tax?

A total area of four kanals including farmland, and a covered area of at least 5,000 square feet.

Is the highway property tax charged on farmland?

No. It covers properties other than agricultural land beside national or provincial highways, or inside the area of motorways.

Is a widow exempt from the highway tax?

Yes, if the annual taxable value of her building or land does not exceed Rs 500,000. The same applies to a divorcee, a disabled person and certain orphans.

Can the tax follow the property to a new buyer?

The page calls the highway tax the first charge upon the property unit, so unpaid arrears can attach to the property. Ask for proof of payment before you buy.

How we verified this

What we checked, where we read it, and what we could not confirm.

Last checked 11 October 2026. The farm house tax and the tax on properties abutting highways and motorways come from the Collection of Provincial Taxes pages of the Excise, Taxation and Narcotics Control Department, Government of the Punjab, at excise.punjab.gov.pk, which we opened on 11 October 2026. The farm house page cites the Finance Act 2011 and the highway tax text cites the Punjab Urban Immovable Property Tax Act 1958. We found no payment dates, rebates or list of notified highway stretches. Example bills are our own arithmetic. Property tax is a provincial subject. Nothing here is legal advice.