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No CVT on immovable property in Islamabad - Lahore_Real_Estate - 07-15-2010 12:49 PM
ISLAMABAD (July 15 2010): There is no Capital Value Tax (CVT) on transfer of immovable property within the jurisdiction of federal capital as the levy was withdrawn as a special case in the federal capital through Finance Act 2010. It is learnt here on Wednesday that the property buyers in Islamabad enjoy CVT exemption, which is expected to increase property business within the jurisdiction of federal capital.
The powers to collect the CVT on property have been transferred to provinces under the 18th Constitutional amendment. There is a serious disparity in applicability of the CVT in provinces as compared to federal capital. Provinces are charging 2 percent CVT on immovable property, whereas capital territory is exempted. It is evident from the fact that the property purchasers in Rawalpindi have to pay 2 percent more tax as compared to those living in Islamabad.
Sources said that there seems to be an omission in the Finance Act 2010, resulting in withdrawal of the CVT on property transactions in capital territory. When contacted, FBR Member Direct Tax Policy and official spokesperson Israr Rauf told Business Recorder that no CVT is applicable on transfer of immovable property in Islamabad. Finance Act 2010 has withdrawn powers of the FBR for collection of CVT on immovable property.
The applicability of the CVT on immovable property was never considered as a revenue generation measure by the FBR. The CVT data has been used for broadening the tax-base. Through Finance Act 2010, the FBR has made it mandatory for the registrars of the property to submit quarterly statements with the particulars of the buyers and sellers of property to their respective provinces.
The data submitted by the property registrars would help in cross matching of information to verify whether the buyers/sellers are within the tax net or not. The purpose of bringing potential buyers of property into the tax net would be served through quarterly statements by the provincial registrars in 2010-2011, Israr Rauf added.
The issue came to the light when some buyers of property approached the National Bank of Pakistan (NBP) in Islamabad to deposit CVT on immovable property. The bank branches informed the buyers of property that there are no instructions to collect the CVT on buying of property in Islamabad. Resultantly, such buyers approached the FBR for clarification. It was a pleasant surprise for the buyers of property to know that the CVT exemption is available to the buyers of property within the jurisdiction of capital territory.