ISLAMABAD: While approving imposition of two percent withholding tax on purchase of property in the upcoming budget, Prime Minister Muhammad Nawaz Sharif has turned down the Federal Board of Revenue’s proposal to acquire private properties at about 20 per cent over and above rates declared in transfer deeds.
As per details, the government is considering imposition of two percent withholding tax on the purchase of property for those who are not filing their income tax returns. However, the rate of withholding would be only one percent on the purchase of property for those who file their income tax returns. The government wants to bring in non-tax filers in the tax net to broaden the extremely low tax base of the country. The government is already charging tax on sale of properties.
In meanwhile, Prime Minister Muhammad Nawaz Sharif also turned down the Federal Board of Revenue’s proposal to opt Indian model to buy the property by paying more than the prices declared in property transfer deeds. The price could be higher up to 20pc compared to the one declared in deed documents. The FBR has prepared the aforesaid plan to stop tax evasion that is estimated at two-thirds of the total potential in the real estate sector. Meanwhile, the government is also considering imposing ten percent federal excise duty (FED) cosmetics, paints and varnishes in coming budget (2014-15). Meanwhile, the FBR is also mulling to introduce new FED structure on lubricating oils. Lubricating oils have been proposed to be subjected to 10 percent FED of the retail price if sold in retail packing and FED at the rate of Rs7.15 per litre if such oil sold in bulk.
On the other hand, during the FBR has shown its willingness to surrender its powers in the budget to grant tax exemptions that cost billion of rupees every year to the national. The move, if implemented, will delegate the power to the parliament to grant tax exemptions instead of the FBR. The FBR should grant exemptions incase of food commodities prices hike.
