06-03-2009, 07:17 AM
By Sajid Chaudhry
ISLAMABAD: The government is considering taxing capital gains on real estate after excluding initial buying cost, transfer documentation cost, provincial fees and impact of inflation, official sources said.
The effort would be made to tax actual gains and not the investment or provincial levies or fees to make this levy simple and enforceable. The rate of capital gains tax on real estate would be kept at lower side in its first year and would be increased gradually each year keeping in view its enforcement in all four federating units, added the official.
The focus of the authorities is to broaden provincial tax base in order to reduce their dependence on federal government and enable them establish and strengthen their tax collecting machinery and ability to enforce.
Federal government and four provincial governments are planning to impose capital gains tax on real estate sector in the budget 2009-10. CGT on real estate to be provincial tax and all four provincial governments to impose it through their finance bills 2009.
This would not only improve overall tax-to-GDP ratio but it would also boost provincial revenues as all the federating units are totally dependent on the federal government for funds. Federal government wants increased revenues for the federating units as well as
enhancement in their capacity to impose and collect tax from their own tax base.
The difference between recent sale value and actual purchase value paid at the time of acquiring of immoveable asset would be the capital gain. Taxing capital gains on real estate would be difficult task as its applicability on different modes of transfer is problematic.
Valuation of old property, transfers through gift deeds, transfer through inheritance, transfer through exchange of immoveable property and determination of actual gains would require hectic deliberations that are yet to start at federal as well as provincial level.
The imposition of CGT on real estate would require framing of rules for their applicability and enforcement and that would also take a lot of time for finalisation.
According to the official sources the collection of CGT on real estate would be entrusted to property registrar offices in each district, where minimum price of land and constructed structure is available at notified rates.
The revenue potential of CGT on real estate is being worked out so that provincial revenues are projected in the provincial budgets. It is expected that four provincial governments would authorise the Federal Board of Revenue to collect this tax and after deducting its collection charges—up to 2 percent—remaining amount would be transferred to the respective province, said the official source.
http://www.dailytimes.com.pk/default.asp...2009_pg5_6
ISLAMABAD: The government is considering taxing capital gains on real estate after excluding initial buying cost, transfer documentation cost, provincial fees and impact of inflation, official sources said.
The effort would be made to tax actual gains and not the investment or provincial levies or fees to make this levy simple and enforceable. The rate of capital gains tax on real estate would be kept at lower side in its first year and would be increased gradually each year keeping in view its enforcement in all four federating units, added the official.
The focus of the authorities is to broaden provincial tax base in order to reduce their dependence on federal government and enable them establish and strengthen their tax collecting machinery and ability to enforce.
Federal government and four provincial governments are planning to impose capital gains tax on real estate sector in the budget 2009-10. CGT on real estate to be provincial tax and all four provincial governments to impose it through their finance bills 2009.
This would not only improve overall tax-to-GDP ratio but it would also boost provincial revenues as all the federating units are totally dependent on the federal government for funds. Federal government wants increased revenues for the federating units as well as
enhancement in their capacity to impose and collect tax from their own tax base.
The difference between recent sale value and actual purchase value paid at the time of acquiring of immoveable asset would be the capital gain. Taxing capital gains on real estate would be difficult task as its applicability on different modes of transfer is problematic.
Valuation of old property, transfers through gift deeds, transfer through inheritance, transfer through exchange of immoveable property and determination of actual gains would require hectic deliberations that are yet to start at federal as well as provincial level.
The imposition of CGT on real estate would require framing of rules for their applicability and enforcement and that would also take a lot of time for finalisation.
According to the official sources the collection of CGT on real estate would be entrusted to property registrar offices in each district, where minimum price of land and constructed structure is available at notified rates.
The revenue potential of CGT on real estate is being worked out so that provincial revenues are projected in the provincial budgets. It is expected that four provincial governments would authorise the Federal Board of Revenue to collect this tax and after deducting its collection charges—up to 2 percent—remaining amount would be transferred to the respective province, said the official source.
http://www.dailytimes.com.pk/default.asp...2009_pg5_6