ISLAMABAD: Immovable property> FBR seeks broadening of CVT scope

[CMY]

ISLAMABAD: The tax authorities have plans to broaden the scope of 2 percent capital value tax on purchase of immovable property, and have proposed amendments in the Finance Act 1989 asking the parliament to re-define the definition of ‘Urban Areas’ for bring in additional areas for taxation, tax official explained Daily Times.

In this regard, the Federal Board of Revenue (FBR) has sought sweeping powers from the parliament to impose the said tax on purchase of immoveable property.

The FBR has further demanded to change the definition of urban areas through an official notification.

New areas, which are expected to be brought within the scope of this tax would be the areas located 10 kilometers from notified rated areas in big districts of the country.

The proposed definition of urban areas include: Islamabad capital territory, cantonment areas, the rating areas as defined under Urban Immoveable property Act, 1958 as enforced in Punjab, NWFP, Sindh and Balochistan except where the rate under the respective provincial local government ordinance 2001 is ‘zero’.

The areas which are to be included in this tax are: areas up to 40 kilometers from outer limits of the cantonment board in Karachi and up to 40 kilometer from notified areas of Karachi City District. In case of Lahore and Faisalabad, in addition to up to 30 kilometers from the outer limits of the cantonment boards in Lahore and Faisalabad and up to 30 kilometer from the notified rated areas of Lahore and Faisalabad City district.

In all cases other than Karachi, Lahore and Faisalabad, up to ten kilometers from the outer limits of the cantonment boards and up to ten kilometers from notified rated areas is to be added to the definition of urban areas.

Now the tax authorities have plans to bring more areas by including rated areas as well as areas outside the limit 10 kilometers from the outer limits of district governments rated areas.

The government imposed CVT in the budget of 2006-07 at the rate of 2 percent on the recorded value of urban immoveable property measuring 500 square yards or 01 Kanal (which ever is less). In case of value of immoveable property is not recorded, CVT may be collected at the rate of Rs 50 per square yards. The minimum threshold of size will not apply in case of commercial property.
http://www.dailytimes.com.pk/default.asp...2008_pg5_2