Islamabad Real Estate: Capital Value Tax En route – Journal



ISLAMABAD, May 30: The government has in principle decided to impose a flat rate of two percent capital value tax (CVT) on real estate in the capital territory of Islamabad (TIC), has learned Dawn.

Budget officials gave the proposal a final nod at a high-level meeting on Wednesday.

Real estate includes land, house, store, apartment, bungalow or any other property that remains in the possession of the same owner for a period of time.

An official, who is familiar with the development, told Dawn that the proposal has been finalized, but subject to cabinet approval.

Under the 18th Amendment, the federal government cannot impose taxes on property that is now under the jurisdiction of the provincial government. However, the federal government has the power to impose such taxes on the territory of Islamabad, the official added.

In the past, the Federal Bureau of Revenue (FBR) had attempted to introduce several CVT rates on real estate, but had to withdraw due to pressure from the “land mafia”. But experts believe that this time the lower rates will make people pay tax.

Experts said that imposing PFC on land transactions would not only generate additional revenue for the government, but put the real estate sector in the tax net.

Former president of the Islamabad Chamber of Commerce and Industry (ICCI), Munawar Mughal, however, criticized the government’s decision to impose the capital value tax.

He said this goes against the government’s announced policy of not levying new taxes in the next budget.

Mr Mughal said residents of the capital were already facing double-digit inflation problems. Steadily rising energy and oil prices have fueled inflation, especially food inflation in the recent past, he added.

At the same time, the businessman said that even the price of real estate has not risen as expected. There is no buyer for the property, he said, adding that those who invested in the property were not even getting their original price.

On the other hand, the tax authorities are optimistic that the proposal will generate sufficient revenue for the government.

However, this collection will depend on strict enforcement and monitoring of all such transactions.



Comments are closed.