Business Desk 
Nov 05, 2025
An image of the entrance of the Punjab Revenue Authority (PRA) building. — APP
The Punjab government made a significant move this year by eliminating the 16% sales tax it had previously levied on commercial real estate rentals.
The reversal comes after the Finance Department recently announced an amendment notification that lowers the tax burden on private passenger transport while formally exempting all public transport services.
The provincial cabinet approved the decision, which was made public at a seminar emphasising the benefits of the reversal.
Trade bodies praised the reform, noting that it will free thousands of retail outlets from an “unnecessary financial strain” and help stabilise the retail sector, which has been grappling with economic pressures.
Officials claim that the 16% tax was implemented on July 1, 2025, under the Punjab Finance Act, 2025, but was later lifted in response to pressure from the Chainstore Association of Pakistan and retailers.
Due to the exemption, commercial leases are no longer subject to sales tax charges or payments by landlords and tenants, which improves cash flow for companies throughout the province.
The new amendment completely eliminates the Punjab Revenue Authority's previous requirement that landlords collect the tax on fixed-fee or rental invoices.
By enhancing affordability and promoting compliance, this policy change is anticipated to boost small businesses, attract investment, and fortify the transportation and real estate industries.
