The Punjab government has imposed a 16 percent sales tax on the rental of commercial properties starting July 1, 2025, under a new framework introduced through the Punjab Finance Act, 2025.
The tax will apply to all Fixed Fee Invoices related to the rental of immovable property, excluding personal dwellings rented for residential use.
Previously, only services explicitly listed under the Punjab Sales Tax on Services Act, 2012, were taxed. However, the new law shifts from this “positive list” approach to a “negative list” model, meaning all services are now considered taxable by default unless exempted through the First Schedule of the Act.
Since the rental of immovable property (excluding residential use) is not included in the exemption list, it is now a taxable service under the jurisdiction of the Punjab Revenue Authority (PRA).
Accordingly, companies issuing Fixed Fee or rental invoices for commercial spaces will be legally obligated to charge and collect Punjab Sales Tax at 16 percent from July 1 onward.
Packages Real Estate (Private) Limited also announced this in a formal intimation letter to clients and partners, emphasizing compliance with the revised tax structure.
The issuing company clarified that the notice is based on the current understanding of the law and that any future amendments or clarifications from the PRA could further impact the tax treatment.