Islamabad High Court Strikes Down Property Tax Notification

The Islamabad High Court (IHC) has annulled the Metropolitan Corporation Islamabad’s (MCI) property tax notification issued on January 23, 2024, declaring it legally ineffective. Justice Mohsin Akhtar Kayani, while ruling on a series of petitions, stated that MCI can only collect property tax at pre-2018 rates until a fresh notification is issued in full compliance with the law. The court noted that the January 2024 notification was never published in the official gazette, making it unenforceable. The petitions were filed by Muhammad Munir Ahmed Chaudhary through Advocate Ahmed Hasan Rana, who argued that the notices sent to property owners under the disputed notification had no legal standing. During the hearing, Rana also submitted a June 26, 2025, MCI order that admitted the January notification was only a draft and never formalized. On this basis, Justice Kayani declared all related tax demands unlawful and void. Earlier, in June 2024, the IHC had suspended implementation of the tax hike as an interim measure. At the time, the court directed property owners to continue paying taxes at existing rates, while new taxpayers were asked to deposit half their assessed amount until the case was decided. The issue of property taxation in the capital has repeatedly been taken to court. In December 2020, the IHC had already struck down the Capital Development Authority’s (CDA) 2018 notification, ruling that only the MCI has the legal authority to levy property tax under the Islamabad Capital Territory Local Government Act, 2015. The law requires MCI to publish proposals, invite objections, and hold public hearings before imposing any new levy. Despite this clarity, overlapping claims between CDA and MCI have caused recurring disputes. The January 2024 notification was another attempt, according to the court, that failed to follow the required procedure. Following the latest ruling, MCI can now collect property tax only in areas where the levy was valid before 2018. Localities added later, including Chak Shahzad and Sector E-11, remain exempt until a new, legally compliant notification is issued. The court also reminded that MCI is barred from raising tax rates until the next local government elections are held. Justice Kayani stressed that the old rates will stay in place until an elected setup is in office to exercise the powers granted under the 2015 Act.