Business Desk 
Jul 04, 2025
On July 1, 2025, the Punjab government will charge a 16% sales tax on the renting of any and all commercial property. The tax is part of the new Punjab Finance Act, 2025, which establishes a 16% sales tax on renting commercial property and will be collected by the Punjab Revenue Authority (PRA).
Under the new law, all commercial rentals, written or unwritten, are now taxable, while residential property rentals for personal use are not taxable. This means that homes and apartments under rent but used for living will remain excluded.
On the other hand, shops or offices, or anything else rented where a business operates, will have an added tax cost.
Previously, taxable services were limited to the services listed under the 2012 Punjab Sales Tax on Services Act.
Additionally, Punjab has transitioned to a negative list. The meaning of this is that all services are taxable services unless they are listed as specifically excluded.
Moreover, since commercial property rent is not now included on the exempt list above, it is now taxable.
Under this new rule, the PRA will apply this rule to any and all fixed-fee invoices implemented for commercial rentals. Therefore, if a business or landlord wants to lease out commercial property, they must charge 16% Punjab Sales Tax on their rental invoices.
Packages Real Estate (Private) Limited has formally informed its clients about the change. In a notice, the company said this update is based on the current interpretation of the law, and any changes or clarifications from the government in the future may further affect the tax application.
