Real Estate Purchasers targeted by Tax Department جائیداد کے خریداروں سے انکم ٹیکس کی وصولی کے اقدامات

Taxation - Real Estate Values to be Re-assessed جائیداد غیرمنقولہ پر ٹیکس کے لیے نئے ریٹس کا تعین ہوگا

Real Estate Taxation: Property Values to be Re-assessed

New Taxes on Real Estate in Pakistan

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.

Real Estate Taxation in Pakistan

Strong possibility of tax up to 35 percent: immovable property deals within three years

SOHAIL SARFRAZ

ISLAMABAD ( 2008-06-07 04:37:14 ) :Following extension in capital gains tax (CGT) exemption on stock exchanges till 2010, the Federal Board of Revenue is exploring another possibility to impose 30-35 percent tax on purchase/sale of property within a period of three years in coming budget.

Sources told Business Recorder on Friday that the FBR would also take some major steps to broaden the tax-base in budget (2008-09) to ensure filing of income tax returns by owners of private hospitals, commercial plazas/buildings and doctors working in hospitals or doing private practice, tenants and shop owners.

These categories of persons are not exempted from filing of income tax returns. However, the actual problem is in the real estate sector where property owners are not filing income tax returns. According to sources, a new proposal is under consideration to tax property where purchase and sale takes place within three years period. However, the exact amount of the levy has yet not been finalised, but it could be ranging between 30-35 percent of the value of transaction.

Sources said that the FBR wanted to strictly enforce Income Tax Ordinance 2001 so that all owners of private hospitals, commercial plazas, and commercial buildings file their income tax return and declare their income according to their actual rental income. Similarly, filing of income tax return by doctors working in hospitals or doing private practice, tenants and shop owners would be ensured in the upcoming budget.

Under section 114 of the Income Tax Ordinance 2001, following persons are required to furnish a return of income for a tax year: Every company; every person (other than a company) whose taxable income for the year exceeds the maximum amount that is not chargeable to tax; any non-profit organisation; any welfare institution that owns immovable property with a land area of 250 square yards or more or owns any flat located in areas falling within the municipal limits existing immediately before the commencement of local government laws in the provinces; or areas in a cantonment; or the Islamabad Capital Territory. Every non-profit organisation including those established for religious, educational, charitable, welfare or development purposes and for the promotion of amateur sports are liable to file income tax returns.

Budget 2008-2009 New Taxes on Builders