ISLAMABAD: The proposed Finance Bill 2018 has empowered the Federal Board of Revenue (FBR) to purchase any immovable property within six months of registration in fiscal year 2018-19.
The FBR shall have the right to purchase any property within six months of registration by paying a certain amount over and above the declared value which may be 100 percent in the fiscal year 2018-19, 75 percent in the fiscal year 2019-20 and 50 percent in the fiscal year 2020-21.
The salient features of tax reforms included property transactions shall be recorded at the value declared by the buyer and the seller. The property rates notified by FBR (for the purpose of collection of taxes on sale purchase of property) and DC rates are to be abolished. At the federal level, a one percent adjustable advance tax from the purchaser on the declared value shall be collected and this tax shall replace the existing withholding tax on sellers and purchasers of property. The provinces shall be requested to abolish the provincial rates for the collection of stamp duty (commonly known as DC rates) and to collect a total of one percent tax under stamp duty and capital value tax on the value declared by the buyer and the seller of property.
In cases where payments for purchase of property are made in installments the purchaser has to bear the entire burden of collection of such advance tax at the time of transfer or property. In order to provide relief to persons purchasing property in installments, advance tax on purchase of property shall be collected piecemeal with each installment.
Presently the rate of super tax under section 4B of the Income Tax Ordinance, 2001 is 4% for banking companies and 3% for persons other then banking companies having income of Rs.500 Million and above. In order to encourage, incentivise and increase the competitiveness of companies and to enable them to contribute optimally towards economic growth, super tax shall be gradually withdrawn. It will be continued at the same rate for the financial year 2017-2018, however, the rate of super tax for both banking as well as non-banking persons shall be reduced by 1% for each successive year starting from the financial year 2018-19. Presently, receipt of bonus shares is included in the definition of income and withholding tax under section 236M and 236N of the Income Tax Ordinance, 2001 is charged @ 5% on the issuance of bonus shares to shareholders.
