Punjab Replaces ARV with CV Tax System

Lahore, August 7, 2025, 02:14 PM PKT — The Punjab government has overhauled its fiscal framework, scrapping its 66-year-old Annual Rental Value (ARV) system for a Capital Value (CV)-based property taxation system, effective January 1, 2025, under the Punjab Finance Act, 2024, a landmark reform led by Secretary Excise and Taxation Punjab Muhammad Masood Mukhtar, as per a news report. The outdated ARV system, criticized for subjectivity, manipulation, and low revenue, relied on estimated rental income from excise inspectors, prompting a shift to objective metrics like plot area and notified rates, backed by Lahore School of Economics research showing reduced discretion and higher revenue despite lower tax rates.

The transition, supported by international bodies like the World Bank, GIZ, and the Sub-National Governance Programme, gained intellectual heft from Dr. Ali Cheema, Vice Chancellor of LUMS, with the Excise & Taxation Department digitizing valuation records, reclassifying five million properties via an IT task force, and integrating with the Board of Revenue’s DC table. A self-assessment system enables online tax filing for transparency and compliance, with value-based exemptions for properties under Rs5 million, while performance incentives and whistleblower rewards counter internal resistance from officials losing discretionary power. Web context on tax reforms shows mixed outcomes, while posts found on X reflect optimism and caution—some praise modernization, others question implementation. Critically, the narrative of “fairer taxation” may mask execution risks—web data hints at past delays, and X sentiment suggests distrust in systemic change, pointing to potential challenges.