Punjab Minister Warns Against Harmful Tax on Commercial Rent, Calls for Immediate Review

Punjab’s Senior Minister for Industries, Commerce, Investment, and Skills Development, Sardar Muhammad Tanveer, Patron-in-Chief of the United Business Group (UBG), has issued a strong statement against the newly imposed 16% sales tax on commercial property rentals in Punjab. He called the tax economically unsound and legally indefensible. Speaking at a business roundtable in Lahore earlier this week, Tanveer urged the provincial authorities to reconsider the decision, warning it could lead to job losses, increased informality, and reduced investment.

The Punjab Revenue Authority (PRA) introduced the 16% sales tax on July 1, 2025, under the Punjab Finance Act, 2025. It applies to the leasing of commercial properties, including offices, shops, and warehouses, while residential rentals remain exempt. The move, intended to boost provincial revenue, has triggered immediate backlash from the business community, especially small and medium-sized enterprises (SMEs) facing mounting operational challenges.

“This tax is not just a revenue measure; it is a barrier to economic recovery,” said Tanveer. “Burdening commercial tenants with excessive taxation discourages entrepreneurship and raises the cost of doing business for everyone. It risks shrinking the formal economy.”

Business leaders have echoed Tanveer’s concerns. Many argue that landlords will likely pass the added costs to tenants, forcing businesses to raise prices, reduce staff, or downsize to stay afloat. Chambers of commerce in Lahore, Faisalabad, and Rawalpindi, along with the Chainstore Association of Pakistan (CAP), have submitted formal objections. They argue the tax is poorly timed, given the weak market demand and the ongoing recovery from the COVID-19 pandemic.

Economic analysts have also questioned the decision. According to Umer Qazi, a financial expert based in Karachi, “While broadening the tax base is important, applying blanket taxes without industry consultation shows a disconnect from economic realities. Private enterprise is the engine of growth. Undermining it hurts both the economy and government revenue.”

Tanveer has called for a policy review and proposed consultations between the Punjab government and business stakeholders. He stressed that creating a supportive investment climate should be prioritized over short-term revenue collection.

With inflation, high utility rates, and currency instability already eroding business confidence, many believe the new tax sends the wrong signal. Whether the provincial leadership will respond to growing public and business pressure remains uncertain. However, the demand for more balanced and practical economic policies is clearly gaining ground.