CCOL MARKETING

A Comprehensive guide for all property related services in Pakistan

WHAT THE BUDGET MEANS FOR THE PROPERTY BUSINESS?

By Gibran Bham

Don't worry; this isn't going to be some long analysis and thesis on the budget. We're just going to talk about the facts:

The Budget of June 2006 was particularly significant because now, all property transactions would be taxed 2%. This has had an adverse affect: property transactions across the country have ground to a halt as buyers & sellers play a waiting game.

Buyers do not want to make transactions because by doing so, they would probably fall under the radar of the country's Tax Bureau. Sellers, on the other hand…

In my hand I've got a copy of the Finance Act 2006, the explanation of important provisions relating to Capital Value Tax (CVT). Here are the main points:

Levy of CVT on urban immovable property transfers falling in the scope of transactions attracting the charge of capital value tax include acquisitions of assets through:

i) Purchase
ii) Gift
iii) Exchange
iv) Surrender
v) Power of Attorney or
vi) Relinquishment of rights

However, transactions from the following through inheritance or gifts have been excluded from its ambit:

i) spouse
ii) parents
iii) grand parents
iv) brother
v) sister

Urban Area means falling in the limits of:

i) Islamabad Capital Territory
ii) A cantonment Board
iii) In case of Karachi, up to 40 kilometers from the outer limit of municipal or cantonment limits.
iv) In case of Lahore and Faisalabad up to 30 kilometers from the outer limit of municipal or cantonment limits
v) In other cases, up to 10 kilometers from the outer limits of municipal bodies or cantonment boards and Areas defined as such in the Urban immovable property tax act, 1958 (WP Act V or 1958) and such areas as the Central Board of revenue may, from time to time, by notification in the official Gazette specify.

Here's the system:

a) Immovable Property (other than commercial property and residential flats) situated in urban area, measuring at least one Kanal or 500 sq. yards (which ever is less):
b) Commercial immovable property of any size situated in urban area:
c) Residential flats with covered area measuring 1500 sq. feet and above:
The above three are taxed in the same way:

i) Where the value of immovable property is recorded is taxed at 2% of the recorded value.
ii) Where the value of immovable property is not recorded is taxed at Rs. 50 per sq. yard of the landed area.

For further information, contact:

Contact CDA

http://www.cda.gov.pk/cda-latest/includes/ask-cda.asp

CDA would welcome suggestions and comments for improvement of Islamabad.

Postal Address:

Executive Block-V, Khayaban-e-Suharwardy G-7/4, Islamabad.
Junction Line : 9208301-4 & 9203049-51
Fax No : 9207075 & 9219413.
Telex No: 54039 PK

Public Relations Directorate:

Executive Block-V, Khayaban-e-Suharwady G-7/4,
Islamabad.
Telephone No : 9209989 Ext (250)

Computer Directorate

Director Computer,
Executive Block-III, Khayaban-e-Suharwady, G-7/4, Islamabad.
Telephone No: 9208301-4 (279)