ISLAMABAD: Taxes on property withdrawn

[CMY]

ISLAMABAD: The powerful lobby of builders, developers and housing societies has succeeded in forcing the government to withdraw Rs 100 per square yard and Rs 50 per square foot capital value tax on plots and flats, proposed in the federal budget 2008-09, sources said here on Wednesday.
"Influential builders and developers have got this levy shifted to prospective buyers of plots, houses, flats and shops in the shape of the Federal Excise Duty," an official of the Federal Board of Revenue (FBR) told media, seeking anonymity.

"Influenced by the strong lobby of builders and developers, the Senate body has directed the FBR to get the Finance Bill 2008-09 amended through Finance Minister Syed Naveed Qamar," he disclosed.

The official said the FBR had submitted to the finance ministry the drafts of two amendments to the Finance Bill. He said one amendment pertained to the shifting of the Capital Value Tax on builders and developers, which has been proposed in the budget, to buyers of properties in the shape of the Federal Excise Duty. The other amendment, he added, sought an amendment to the Finance Bill with regard to the rating area.

“According to the Finance Bill, 10 to 40 kilometre area out of the municipal limits of cities has been proposed as the rating area. Tax on plots and houses in a rating area is levied at the rate charged in the respective cities,” the official said.

"The proposed amendment envisages reduction in rating area of Karachi from 40 to 20 kilometres, Lahore 30 to 15 kilometres, Faisalabad 20 to 10 kilometres and rating areas of all other cities from 10 to five kilometres," he added.

The official said the Senate body had proposed exemption of the areas outside the proposed rating areas from the Capital Value Tax and if this proposal was accepted, the rating areas of all the cities would decrease. He said in such a situation, a particular segment of society would benefit from the decrease in the rating areas whereas the national exchequer would be deprived of a significant amount of revenue under the head of the Capital Value Tax.
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