Luxury House Tax in Punjab: Rs 200,000 a Kanal in Lahore and Who Is Exempt
Punjab charges a luxury house tax on homes over 2 kanals and 6,000 sq ft. See rates by city, the three exemptions, a worked example and how to check your bill.
Punjab charges a luxury house tax on big homes: Rs 200,000 a kanal in Lahore, capped at Rs 2,000,000, once a house passes two kanals and 6,000 square feet of covered area. Older houses and a widow's inherited home are exempt. We read the rates on the Excise Department's own page on 11 October 2026.
Most Punjab owners know the yearly property tax. Fewer know that a second tax sits on top of it for large houses. It is called the luxury house tax, and the liability falls on the owner or the occupier, jointly. If you own a big house in Lahore, Faisalabad or a cantonment, it is worth checking before the department checks you.
The luxury house tax is an extra tax on large houses
The Punjab government imposed the tax through the Finance Act 2014. It applies to residential houses in notified rating areas under the Punjab Urban Immovable Property Tax Act 1958, and to cantonment areas. It is charged in addition to the normal property tax, not instead of it.
A "rating area" is simply an urban area where property tax is levied. If you already pay property tax on your house, you are almost certainly inside one. The department's page says liability rests with the owner or the occupier "jointly and severally". In plain words, the department can ask either of them for the full amount. A tenant in a large rented house should know that.
The rate depends on the city and the size of the house
The rate is charged per kanal and depends on the location and on two size tests: the plot size and the covered area. A house must pass both to be taxed. The page lists three location bands, and each band has two size tiers.
| Location | Size test | Rate per kanal | Maximum |
|---|---|---|---|
| Lahore district, including Lahore and Walton cantonments | 2 kanals or more, covered area above 6,000 sq ft | Rs 200,000 | Rs 2,000,000 |
| Lahore district | 8 kanals or more, covered area above 12,000 sq ft | Rs 300,000 | Rs 3,600,000 |
| Divisional headquarters districts and their cantonments | 2 kanals or more, covered area above 6,000 sq ft | Rs 150,000 | Rs 1,500,000 |
| Divisional headquarters districts and their cantonments | 8 kanals or more, covered area above 12,000 sq ft | Rs 250,000 | Rs 3,000,000 |
| All other rating areas and cantonments | 2 kanals or more, covered area above 6,000 sq ft | Rs 100,000 | Rs 1,000,000 |
| All other rating areas and cantonments | 8 kanals or more, covered area above 12,000 sq ft | Rs 200,000 | Rs 2,400,000 |
For any area smaller than a full kanal, the department charges pro rata for each full marla. Anything under one marla is left out. The maximums work out as the rate for 10 kanals in the lower tier and 12 kanals in the upper tier, so a very large plot stops paying more after those sizes.
Three kinds of houses are exempt
Three groups do not pay the tax. The department lists them on the same page, and the dates matter, because they are fixed in the past.
- A residential house whose construction was completed before 1 January 2001.
- An existing house owned through an inheritance that opened before 1 July 2014.
- A house, or part of it, owned by a widow through inheritance and used as her permanent home.
The widow's exemption covers one house only. If she inherits two taxable houses, she is exempt on one and taxed on the other. The 2001 rule is the one that surprises people: an old, large house built before the cut-off date is outside the tax even if it is in the top tier.
A worked example shows how the bill is built
Take a house on 3 kanals in Lahore with 7,000 square feet covered. It passes the first tier, since the plot is above two kanals and the covered area is above 6,000 square feet. At Rs 200,000 a kanal, the arithmetic gives Rs 600,000, which is below the Rs 2,000,000 cap.
Now take 10 kanals in Lahore with 13,000 square feet covered. It passes the upper tier, so the rate is Rs 300,000 a kanal. Ten kanals gives Rs 3,000,000, below the Rs 3,600,000 cap. Two points to keep honest here. The page states the rate "per kanal" but does not spell out in so many words whether it means the plot area or the covered area, so use the department's own luxury house tax calculator to get your exact figure. And this is the luxury tax only. Your normal property tax comes on top.
We could not confirm the current payment terms
The department's page still carries the original 2014 wording, including payment dates of 30 September 2014, a one-time or four-instalment option, a 10 percent rebate for early lump sum payment and a surcharge of 1 percent a month on late payment. Those dates are long past, and the page does not say what applies today.
We could not find a later notification that changes the rates, so we quote the rates as listed. We also could not confirm the current rebate or surcharge. Treat the 2014 payment terms as history. Check the current terms on your assessment notice or at the excise office. Property tax rebates are announced separately each year, as in the Punjab property tax rebate that ended on 30 September 2026.
Check and pay what you owe in six steps
Start from your property tax record. If your house is in a rating area and meets the size tests, the luxury tax should already appear in the assessment. If it does not and you think it should, ask before the department sends a recovery notice.
- Find your property tax unit number on your last PT-10 challan or assessment.
- Check the plot size in kanals and the covered area in square feet on your papers.
- Compare both against the size tests in the table above.
- Check the three exemptions, especially the construction date and inheritance date.
- Use the department's luxury house tax calculator, listed under Tax Calculators on its site, for your figure.
- Pay through the department's online payment service or at the excise office.
If you disagree with how your house was assessed, you have a right to object. The steps and time limits are in the guide on how to object to a Punjab property tax assessment. And to pay the main property tax, see how to pay Punjab property tax online.
Common questions
Who pays the luxury house tax in Punjab?
The owner or the occupier, jointly. The department's page says the liability rests with both "jointly and severally", so either can be asked for the full amount.
Is the luxury house tax the same as property tax?
No. It is a separate tax charged in addition to the property tax on large residential houses in rating areas and cantonments.
What size of house pays the tax?
A house on 2 kanals or more with more than 6,000 square feet covered, and a higher tier at 8 kanals or more with more than 12,000 square feet covered.
Is a house built before 2001 exempt?
Yes. A residential house whose construction was completed before 1 January 2001 is exempt, according to the department's page.
Does a widow pay the tax on her inherited home?
No, if she uses it as her permanent home. The exemption covers one house only, even if she owns several taxable ones.
How we verified this
What we checked, where we read it, and what we could not confirm.
Last checked 11 October 2026. The rates, size tests and exemptions come from the Tax on Luxury Houses page 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 page cites the Punjab Finance Act 2014, the Punjab Urban Immovable Property Tax Act 1958 and the Cantonment Act 1924. The page still shows the 2014 payment dates, and we found no later notification. Worked examples are our own arithmetic from the listed rates. Property tax is a provincial subject. Nothing here is legal advice.
About the author
Tax, Bills and Technology Writer
Ali Akhtar is a young and curious voice here at Pakistan Era. He is currently pursuing his A-Levels and has a growing interest in Pakistan’s changing industrial landscape and educational trends. Ali likes to write in a way that helps him explain and explore the world around him. His writing reflects the perspective of the new generation navigating the evolving trends of Pakistan where technology, youth innovation, and shifting opportunities are reshaping the country’s future.
