Govt may double tax on transfer of properties

[Hell hound]

ISLAMABAD: The government may double the tax burden of sellers and purchasers on transfer of properties in addition to fixing a flat 10% tax rate on gains made on sale of properties within five years of holding period.

Sources said Finance Minister Ishaq Dar has cleared a budget proposal to increase the tax burden of both filers and non-filers of tax returns on transfer of the properties to generate Rs13 billion in revenue.

Pakistan agrees to slap billions in new taxes

If approved by Prime Minister Nawaz Sharif, the government may double withholding tax rate to 1% for those sellers who are filers of income tax returns. For sellers who are non-filers, the proposed withholding tax on transfer of properties is 2%, according to sources.

Similarly, the government may also double withholding tax rates for purchasers on transfer of properties. Currently, purchasers who file income tax returns pay 1% of the value of the property in withholding tax. According to the budget proposal, this rate will be increased to 2%. Withholding tax on non-filing purchasers will be increased to 4% from the current 2%, sources added.

However, any decision to increase taxes for filers of income tax returns in the new budget goes against Finance Minister Ishaq Dar’s commitment. While addressing a pre-budget seminar, Dar assured the government would not put extra burden on existing taxpayers in the new budget.

The Federal Board of Revenue is of the view that since market prices of immovable properties have increased manifold, these people should pay extra taxes.

Budget 2016-17: Several income tax benefits expected in budget speech

Tax authorities also argue that withholding taxes on sales and purchases are based on district collectors’ (DC) rates, which are very low when compared with market rates of these properties. DC rates vary from district to district, area-to-area, size, and location of property, buyer and seller’s position and terms of dealings.

After coming into power, the federal government had vowed to revise DC rates of property valuations in consultation with provinces. Despite the lapse of three years, the government has not yet fulfilled this promise.

CGT regime

The government may also revisit the tax regime for Capital Gains Tax (CGT) on immovable properties. Currently, there is no tax on capital gain from immovable property, if it is sold after two years of property acquisition.

However, if the property is sold within one year of acquisition, the person has to pay 10% of the gain in CGT. If the holding period is up to two years, the person has to pay 5% of the gain in taxes.

Sources said Dar has cleared a proposal to replace this regime and now a flat 10% tax will be charged, if the properties are sold within five years. The revenue impact of this proposal is about Rs5 billion.

The authorities argue that people postpone transactions beyond two years to avail CGT exemption. Secondly, brokers obtain transfers on power of attorney and execute transfer after two years to avoid the taxes.

Govt may increase tax on dividend income to 20%

The authorities have also proposed to bring family homes in the jurisdiction of the proposed new regime, which are currently exempted from CGT.

The World Bank (WB) has also asked Pakistan to withdraw CGT exemption on transfer of properties beyond two years.

Tax authorities say the lack of a mechanism for proper valuation of immovable properties is one of the major hurdles in judicious taxation of capital gains. WB has recommended Pakistan to either create an independent valuation authority or adopt the right to acquire sales like India.

However, due to presence of a strong real estate lobby in the federal cabinet, the government is reluctant to accept such proposal. The other issue is the jurisdiction, as provinces also have the right to tax properties.

The World Bank had proposed that the market value of the property should be determined without regard to the values use for different purposes by provincial governments. Sources said the federal government might adopt the WB’s recommendation to the extent of Islamabad Capital Territory (ICT) in the new budget.

 

[Hell hound]

my view are it a great move as gap between our import and export is increasing every day people tend to invest money in properties which at the moment have high rate of return while it generate absolutely nothing for our country to export and very few people benefit from the investment. by reducing the rate of return they are forcing the hand of the investor to invest in industry and agriculture sector which in turn will create more jobs and increase the circulation of the money in the country
people living in Pakistan specially Lahore Karachi and Islamabad will know how bad the situation is in the capitals everyone here tend to invest in the properties.
last best thing about it is that they are introducing the capital gain tax of 10% of profit for every property sold within the 5 year period of its purchase thats a great move because it is a progressive tax and will affect the rich more then poor.and its time people in Pakistan should know about capital gain tax if you earn something in a country you should pay back the country and it shouldn't be only restricted to income tax.

@Zibago @haviZsultan @DESERT FIGHTER @Oscar @somebozo @S.U.R.B. @django @Muhammad Omar

 

[BRAVO_]

my view are it a great move as gap between our import and export is increasing every day people tend to invest money in properties which at the moment have high rate of return while it generate absolutely nothing for our country to export and very few people benefit from the investment. by reducing the rate of return they are forcing the hand of the investor to invest in industry and agriculture sector which in turn will create more jobs and increase the circulation of the money in the country
people living in Pakistan specially Lahore Karachi and Islamabad will know how bad the situation is in the capitals everyone here tend to invest in the properties.
last best thing about it is that they are introducing the capital gain tax of 10% of profit for every property sold within the 5 year period of its purchase thats a great move because it is a progressive tax and will affect the rich more then poor.and its time people in Pakistan should know about capital gain tax if you earn something in a country you should pay back the country and it shouldn't be only restricted to income tax.

let me summarize my thoughts

Why we pay Taxes?

The government uses taxes to pay for things that most people use, such as roads, schools, libraries, police, fire protection, defense and other govt services, that is why govt officers in west use to be known as public servants.

how good govt departments are doing ... you are a better judge...

Why Pakistani govt Collect Less Taxes

Due to administrative weaknesses , corruption, lower tax compliance and under-reporting, Pakistan is bleeding Rs3.3 trillion a year in revenue – an amount that is higher than this year’s total tax collection target. further number of tax payers has.t increase but instead govt is imposing more and more taxes on already tax payers and such move will further cause disappointment in investors and and in ordinary public. the original tax payers who were suppose to be tax are exempted including most of politicians and core industrialists. so the tax boat has so many holes in it no meter how much money you will pour on it .. it will drain out through those holes.

Result of Increase in Property Tax

small investor and ordinary public will be affected with this increase since the big fishes know very well how to maneuver with laws and how to manipulate the system to avoid taxes.

 

[Hell hound]

let me summarize my thoughts

Why we pay Taxes?

The government uses taxes to pay for things that most people use, such as roads, schools, libraries, police, fire protection, defense and other govt services, that is why govt officers in west use to be known as public servants.

how good govt departments are doing ... you are a better judge...

Why Pakistani govt Collect Less Taxes

Due to administrative weaknesses , corruption, lower tax compliance and under-reporting, Pakistan is bleeding Rs3.3 trillion a year in revenue – an amount that is higher than this year’s total tax collection target. further number of tax payers has.t increase but instead govt is imposed more and more taxes on already tax payers and such move cause disappointment in investors and and in ordinary public. the original tax payers who were suppose to be taxeted are exempted including most of politicians and core industrialists. so the tax boat has so many holes in it no meter how much money you will pour on it .. it will drain out through those holes.

Result of Increase in Property Tax

small investor and ordinary public will be affected with this increase since the big fishes know very well how to maneuver with laws and how to manipulate the system to avoid taxes.

i consider it a good move because it will be first time we will be taxing someone else then the employees and job holder (or jobian word used for them in pakistan) we will be taxing business man and investor under a total new capital gain tax it will lift some weight from the working class and shift it on the business class it not much but it is the first step in the right direction
and believe me brother if you think that avoiding tax is now as easy as it was few year ago you are mistaken if you are a non tax filler every thing is expensive for you and its is far better and economically feasible to file the return than to be charged under withholding tax.

 

[BRAVO_]

i consider it a good move because it will be first time we will be taxing someone else then the employees and job holder (or jobian word used for them in pakistan) we will be taxing business man and investor under a total new capital gain tax it will lift some weight from the working class and shift it on the business class it not much but it is the first step in the right direction
and believe me brother if you think that avoiding tax is now as easy as it was few year ago you are mistaken if you are a non tax filler every thing is expensive for you and its is far better and economically feasible to file the return than to be charged under withholding tax.

The tax system of the country seems to have continuously benefited the elite. A huge amount of taxes comes from the poor through indirect taxes compared to the very little contribution of direct taxes from the affluent class.

Another distress here is a conflict of interests, the individuals who benefit from conventional tax policies are those who are in power constantly. They never include themselves in the tax net, the delay in tax on agriculture specially the big landlords income is a real example of this phenomenon. So taxes from indigents and gains to wealthy are basic flaws in the fiscal policy.

The share of industrial sector is 63% in tax revenues and 18.9% in gross domestic product (GDP). On the other hand, the agriculture sector contributes 20.9% to GDP while its share in taxes is a mere 1.2%.

The stakeholders in this Agriculture sector link taxes with development according to them they do not have such infrastructure as the industrial sector is enjoying, then why the government expect to collect revenue from them according to the proportion of their income. so until tax system will not be overhauled these minor changes will not make any difference.

 

[Hell hound]

The tax system of the country seems to have continuously benefited the elite. A huge amount of taxes comes from the poor through indirect taxes compared to the very little contribution of direct taxes from the affluent class.

Another distress here is a conflict of interests, the individuals who benefit from conventional tax policies are those who are in power constantly. They never include themselves in the tax net, the delay in tax on agriculture specially the big landlords income is a real example of this phenomenon. So taxes from indigents and gains to wealthy are basic flaws in the fiscal policy.

The share of industrial sector is 63% in tax revenues and 18.9% in gross domestic product (GDP). On the other hand, the agriculture sector contributes 20.9% to GDP while its share in taxes is a mere 1.2%.

The stakeholders in this Agriculture sector link taxes with development according to them they do not have such infrastructure as the industrial sector is enjoying, then why the government expect to collect revenue from them according to the proportion of their income. so until tax system will not be overhauled these minor changes will not make any difference.

tax is not linked with development or infrastructure neither it should be (with few exceptions of tax relief zones which government is trying to develop) .the bases for calculating the tax should always be the income generated be it industrial sector or agriculture.you can subsides a sector afterward by other mean like cheaper fuel electricity etc but base of calculating the tax for individual should always be his income or gain.
you can't directly grab the elite class no one in world directly attack them.for that you need to attack higher middle class first because this is the best place to collect your taxes as there are large number of people in this bracket with fairly good income they are aware of their right but they are not that well connected .so when you attack them they pay up but at the same time start demanding the taxation of higher class which makes the governments job easier they can now force higher class which do have some contacts so some of them evade the tax while minority of them start paying taxes .then government get hands on few of the evader some of them again dodge the bullet while few cases will come to public attention and middle will not forgive them and will make example out them.after that higher class (not all of them not 50%)will start paying cycle Will continue till government is ready to move to the elites and same thing will happen to them
this is the case of a progressive society and this taxation seems like a step in the right direction.i don't have this much high hopes but still i think it will help in building a tax culture in pakistan.

 

[DESERT FIGHTER]

screw the govt... Instead of bringing more people into the tax net these Fukin idiots are increasing tax on everything ...

 

[Hell hound]

screw the govt... Instead of bringing more people into the tax net these Fukin idiots are increasing tax on everything ...

they are forcing more people to pay the tax by making it impossible for non filers to do any type of financial transaction and i think its a great move.even overseas Pakistanis are considering fileing the tax return because it is eating huge chunk of their gains from saving accounts and property

 

[DESERT FIGHTER]

they are forcing more people to pay the tax by making it impossible for non filers to do any type of financial transaction and i think its a great move.

By taxing more? Is it collective punishment ? I pay all my Fukin taxes .. In fact I pay more taxes than the Fukin PM of this country (whose a Fukin defaulted himself)...

The only thing he's making impossible is for the poor people to survive ...

Let's look beyond ourselves .. poor people are getting screwed .. From income tax down to 35+
RS even on a mobile prepaid card ?

Come on .. Instead of taxing or should I say enforcing the system and making it efficient these kooks are increasing taxes .. Makes no sense.

 

[Hell hound]

By taxing more? Is it collective punishment ? I pay all my Fukin taxes .. In fact I pay more taxes than the Fukin PM of this country (whose a Fukin defaulted himself)...

The only thing he's making impossible is for the poor people to survive ...

Let's look beyond ourselves .. poor people are getting screwed .. From income tax down to 35+
RS even on a mobile prepaid card ?

Come on .. Instead of taxing or should I say enforcing the system and making it efficient these kooks are increasing taxes .. Makes no sense.

i am not affiliated with any political party do i will not defend N league .but lets be honest how many of us properly file the income tax return.if common man of Pakistan is not paying direct tax then gov of Pakistan has to gather it in indirect way.i know the system is not perfect but need to force people to pay direct tax and file their tax return.and current government seams to be doing the exact thing making the life miserable for non tax filer.
now government next step should to hold adverts, seminars and addition of tax subject(or integration of it with maths) at intermediate or graduation level.to rise awareness in the public about how much financially feasible it is to pay direct tax rather then paying indirect tax

 

[BRAVO_]

By taxing more? Is it collective punishment ? I pay all my Fukin taxes .. In fact I pay more taxes than the Fukin PM of this country (whose a Fukin defaulted himself)...

The only thing he's making impossible is for the poor people to survive ...

Let's look beyond ourselves .. poor people are getting screwed .. From income tax down to 35+
RS even on a mobile prepaid card ?

Come on .. Instead of taxing or should I say enforcing the system and making it efficient these kooks are increasing taxes .. Makes no sense.

Agreed ...

i am not affiliated with any political party do i will not defend N league .but lets be honest how many of us properly file the income tax return.if common man of Pakistan is not paying direct tax then gov of Pakistan has to gather it in indirect way.i know the system is not perfect but need to force people to pay direct tax and file their tax return.and current government seams to be doing the exact thing making the life miserable for non tax filer.
now government next step should to hold adverts, seminars and addition of tax subject(or integration of it with maths) at intermediate or graduation level.to rise awareness in the public about how much financially feasible it is to pay direct tax rather then paying indirect tax

Frankly people in govt should become trend setter ...in a country where the Prime Minster of the country owing a list of industries in and out side the country, paying a tax lesser than many of us ... .. do such person has any moral authority to ask the same for others??? all of us want a prosperous Pakistan by paying the taxes to a govt which utilize them in a better manner.. but if some one ask me to pay the tax to these vulture... No Sir .. i dont earn money to contribute in the industrial and real estate empires of these political leaders

 

[Hell hound]

Agreed ...


Frankly people in govt should become trend setter ...in a country where the Prime Minster of the country owing a list of industries in and out side the country, paying a tax lesser than many of us ... .. do such person has any moral authority to ask the same for others??? all of us want a prosperous Pakistan by paying the taxes to a govt which utilize them in a better manner.. but if some one ask me to pay the tax to these vulture... No Sir .. i dont earn money to contribute in the industrial and real estate empires of these political leaders

that where the problem lies the mentality that if someone is doing something wrong then i am also entitled to do that wrong tax is your responsibility toward Pakistan and you are legally bound to pay it no matter who is ruling the country and one can't just doge it because a powerful figure in Pakistan is doing it.this way you will never be able to hold them accountable because you yourself will have committed the same crimes as them.

 

[raj76]

so as a tax they will increase stamp duties but do they control the rates of properties or ppl could get the transfer the property at lower rates (on paper) just to evade tax

and to be honest doubling it will only lead to more corruption they could have increased in a subtle way

 

[Hell hound]

so as a tax they will increase stamp duties but do they control the rates of properties or ppl could get the transfer the property at lower rates (on paper) just to evade tax

and to be honest doubling it will only lead to more corruption they could have increased in a subtle way

last time i checked government can buy back the property by paying certain amount of premium over the base selling price shown on the papers

 

[raj76]

last time i checked government can buy back the property by paying certain amount of premium over the base selling price shown on the papers

hmm in india the highest selling price in that area becomes the base price (multiply by 4) if govt want to acquire + government can only acquire if they can convince its in the public interest like roads, canals etc