Property tax law revised: FBR will evaluate properties annually

According to the news, negotiations between government officials and realtors held successful when a dispute of property valuation and taxation between both parties solved on Sunday. Government revised the property tax law, has taken back the authority of property valuation from state bank which was recently assigned, and now this power rests with FBR. For those who were involved in undervaluing a property and tax evading, a package has been introduced in which they can pay 5% tax on the transaction concluded in past 3 years and their properties will be legitimized. Civil servants of provisional and federal governments, overseas Pakistanis and officers of armed forces of Pakistan who will be the original allottee of plot, will be taxed half of the capital gain tax. For the purpose of exempting capital gain tax from property tax, available limit is reduced from 5 years to 3 years. Immovable property tax has been divided into three categories, according to which 10% capital gain tax on first year, 7.5% on second and on third year 5% tax will levied. FBR will valuate immovable property on annual basis from now on, current valuation will be valid till 30 June 2017.

This law was passed after a series of events in which Government appointed SBP for the valuation of immovable property, realtors opposed the decision and government officials offered negotiations for this purpose. PM’s revenue consultant Mr. Haroon Akhtar and a team of realtors consisting 13, had meetings for 3-4 days after that Finance minister Ishaq Declared this result in front of media. He told media that an agreement has been made between government officials and realtors, from now on FBR will evaluate immovable property annually and a notification of prices will be issued for all the areas accordingly. Withholding tax is exempted from properties having worth of 30 lakhs, now properties only having worth more than 40 lakhs will be charged for withholding tax. Ishaq dar also added that these policies will be implemented after a proper legislation and no proceeding will be done without formulation of law. The property dealings done before 1st of July are also settled in a way that, if a property is bought before 1st of July and sold within three years, 5% capital gain tax will be charged on its current value. Those few cities whose immovable properties are net yet valuated, will be dealt with same DC rate.

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