09-09-2009, 06:52 AM
SOHAIL SARFRAZ
ISLAMABAD (September 09 2009): The government is planning to fix a uniform rate of capital value tax (CVT) on the transfer of immovable property, irrespective of sizes of plots. It is also under consideration to withdraw all kinds of exemptions available on the transfer of property to a certain size of plots under the income tax laws. This would result in across the board levy of uniform CVT rate on immovable property.
Sources told Business Recorder on Tuesday that the issue of rationalisation of CVT rates on immovable property was discussed in a meeting between the FBR, Tax Advisory Council and the Ministry of Finance on tax policy issues. The amendments made through Finance Act, 2009 pertaining to CVT-related issues also came under discussion.
During the meeting, FBR Member Domestic Operations (North) pointed out that transferees break bigger plots into smaller ones and execute multi-registrations due to different rates of CVT. This is a major cause of revenue loss on account of CVT collected from immovable property.
A senior official of Ministry of Finance suggested that all exemptions on account of CVT may be done away with. Secondly, uniform rates may be fixed irrespective of sizes of plots. The Finance Minister agreed to the proposal for effective collection of CVT from immovable property.
The FBR has issued directions to the FBR Member Policy Direct Taxes, FBR Member Domestic Operations (North), FBR Member Domestic Operations (South) and Member Legal for implementation of the proposal. However, it is yet not clear about the new uniform rate of CVT on immovable property and time frame for implementation of the decision. Sources said that the technique used by the property owners is to divide the property into two portions to operate below the exemption limit.
If 4 percent CVT is applicable on residential immovable property, (other than flats), situated in urban area, measuring at least 500 square yards or one kanal, the property is being divided into two portions to show less measuring area for exemption of CVT. Secondly, another technique is to show measuring area slightly below the taxable limit to avoid CVT.
In case the government levies uniform rate of CVT on immovable property, irrespective of the size, it would end the loopholes in the CVT collection mechanism. It would also help in CVT collection from all property transactions, irrespective of the property size. If the government agrees to this proposal, amendment in relevant income tax laws would be required to implement the decision, sources added.
http://www.brecorder.com/index.php?id=959101
ISLAMABAD (September 09 2009): The government is planning to fix a uniform rate of capital value tax (CVT) on the transfer of immovable property, irrespective of sizes of plots. It is also under consideration to withdraw all kinds of exemptions available on the transfer of property to a certain size of plots under the income tax laws. This would result in across the board levy of uniform CVT rate on immovable property.
Sources told Business Recorder on Tuesday that the issue of rationalisation of CVT rates on immovable property was discussed in a meeting between the FBR, Tax Advisory Council and the Ministry of Finance on tax policy issues. The amendments made through Finance Act, 2009 pertaining to CVT-related issues also came under discussion.
During the meeting, FBR Member Domestic Operations (North) pointed out that transferees break bigger plots into smaller ones and execute multi-registrations due to different rates of CVT. This is a major cause of revenue loss on account of CVT collected from immovable property.
A senior official of Ministry of Finance suggested that all exemptions on account of CVT may be done away with. Secondly, uniform rates may be fixed irrespective of sizes of plots. The Finance Minister agreed to the proposal for effective collection of CVT from immovable property.
The FBR has issued directions to the FBR Member Policy Direct Taxes, FBR Member Domestic Operations (North), FBR Member Domestic Operations (South) and Member Legal for implementation of the proposal. However, it is yet not clear about the new uniform rate of CVT on immovable property and time frame for implementation of the decision. Sources said that the technique used by the property owners is to divide the property into two portions to operate below the exemption limit.
If 4 percent CVT is applicable on residential immovable property, (other than flats), situated in urban area, measuring at least 500 square yards or one kanal, the property is being divided into two portions to show less measuring area for exemption of CVT. Secondly, another technique is to show measuring area slightly below the taxable limit to avoid CVT.
In case the government levies uniform rate of CVT on immovable property, irrespective of the size, it would end the loopholes in the CVT collection mechanism. It would also help in CVT collection from all property transactions, irrespective of the property size. If the government agrees to this proposal, amendment in relevant income tax laws would be required to implement the decision, sources added.
http://www.brecorder.com/index.php?id=959101