CVT extension: The NA refused the tax authorities’ demand to extend the scope of capital value tax (CVT) on the purchase of immoveable property in rural areas.
The tax authorities wanted to extend the scope of the two percent CVT on the purchase of immoveable property in areas 40 kilometres from the outer limits of cantonment boards in Karachi and up to 40 kilometres from the notified, rated areas of the Karachi City District.
In Lahore and Faisalabad, it was proposed to extend the scope of CVT over areas 30km from the outer limits of the cantonment boards and the notified rated areas.
The scope of the two percent CVT in the rest of the cities was proposed to be extended to up to 10 kilometres from the outer limits of the cantonment boards and up to 10 kilometres from the notified rated areas.
However, the finance bill has authorised the Federal Board of Revenue (FBR) to extend the scope of two percent CVT in areas to be notified after fiscal year 2008-09.
According to another new clause inserted in the finance bill, the tax on services provided by property developers for the development or conversion of purchased or leased land into residential or commercial plots will be set at Rs 100 per square yard.
The tax will be set at Rs 50 per square foot of the covered area in case of the construction of residential or commercial units.
An amendment has also been made to the Finance Act, 1989, according to which a two percent CVT shall be levied when the general power of attorney is used to sell the mortgaged property or property offered as collateral for obtaining loan from a bank.
The WHT on rental income has also been revised. A five percent tax will be charged on rental income between Rs 150,000 and Rs 400,000. The tax will be charged on the amount exceeding Rs 150,000.
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