Municipal Taxation Act, 1881

This 1881 Act gives the government power to exempt certain people -- mainly military, naval and air-force personnel required to live within a municipality because of their duties -- from municipal taxes, while ensuring the municipality is still compensated. Section 1 sets its scope across all of Pakistan, and Section 2 defines "Municipal Committee" broadly to include municipal corporations and similar bodies (and, per a footnote, cantonment boards are also treated as Municipal Committees under the Cantonments Act, 1924).

Section 3 is the central power: the Federal Government can, by written order, prohibit a Municipal Committee from levying any specified tax on a person who is subject to the Pakistan Army Act, Navy Ordinance, or Air Force Act and who is compelled by military duty to live within municipal limits -- and can rescind that prohibition later. Section 3A gives the Provincial Government a parallel power to prohibit a Municipal Committee from taxing the Provincial Government itself.

Because blocking a tax would otherwise leave the municipality short of revenue, Section 4 requires the Federal Government to pay the Municipal Committee the amount that person would otherwise have owed (with an exception for horses the person must keep under service regulations), and Section 5 similarly requires the Provincial Government to pay a "fair and reasonable" amount in lieu of any tax it has itself been exempted from under Section 3A. Section 6 makes the Federal Government's decision final and unchallengeable on questions of whether a duty counts as military/naval/air-force duty, or whether someone was actually compelled to reside within municipal limits.

This is a narrow, old colonial-era statute (1881), extensively amended over time (as shown by the many "Subs. by A.O." and similar footnotes updating terms like "Governor-General in Council" to "Federal Government"). It remains a niche provision mainly relevant to military personnel's municipal tax obligations and should be checked against the current official text before relying on specific figures or procedures.