ISLAMABAD: On the issue of valuation of property and related tax matters, the Federal Minister for Finance held successful talks with the property evaluators from all over the country at the Federal Board of Revenue (FBR) on late Saturday evening.
It has been agreed for holding valuation in major cities, while valuation tables will be notified by FBR instead of valuation by State Bank of Pakistan’s approved valuers. However, till such time and for those areas for which no valuation tables are notified, DC rate will be applied.
Holding period for capital gain tax (CGT) has been reduced from 5 to 3 years under which no CGT will be charged on property held for more than 3 years.
According to the tax rates for properties acquired on or after July 1, 2016, CGT will be charged at 10 percent if holding period is up to 1 year. If holding period is between 1 and 2 years, CGT will be 7.5 percent. If holding period is between 2 and 3 years, the FBR will collect CGT at the rate of 5 percent, while tax exemption will be given if holding period is more than 3 years.
And for properties acquired before July 1, 2016, the CGT will be charged at five percent, if holding period is less than three years. If holding period is more than 3 years, tax exemption will be given.
Valuation will apply on (i) CGT (ii) withholding taxes (iii) for the purposes of sec 111. Basic threshold of Rs 3 million for application of withholding tax on purchase of immovable property enhanced to Rs 4 million
Appropriate legislation will be done to give effect to the proposed changes as agreed with all stakeholders.
