TAX NEWS - JUNE 2010
Pakistan Tax: Centre abolishes Capital Value Tax (CVT) from July 1
The Federal Board of Revenue (FBR) is no more empowered to collect four per cent Capital Value Tax (CVT) on transaction of immoveable property. It is the right of the provinces to decide the ultimate fate of this tax.
"Now the Capital Value Tax (CVT) on property is a provincial subject in the aftermath of the 18th Amendment. Therefore, the Capital Value Tax has been transferred to the provinces and the FBR does not have the authority to collect this tax," FBR Member Direct Taxes Asrar Rauf confirmed on Sunday, when our sources contacted him. The official sources said that the FBR had considered at one stage to reduce the rate of Capital Value Tax (CVT) from four per cent to two per cent and exemption of tax on land transaction below one kanal. "But after the 18th Amendment, the right of imposing the Capital Value Tax (CVT) on land transaction is a provincial subject," the sources added.
To another query, Asrar Rauf said the registrar of the Revenue Department, and vehicle registration authorities of provincial governments were bound under the law to furnish details of land transactions as well as total registered vehicles before the Federal Board of Revenue authorities on quarterly basis that would enable the tax authorities to undertake action against tax evaders.
He said the Federal Board of Revenue had collected Rs 2.5 billion from 4 per cent Capital Value Tax (CVT) on land transaction during the first 10-month (July-April) period of the outgoing fiscal year, so the cost of abolishing this tax would be hovering around the same level.
However, Chairman FBR Sohail Ahmed told this reporter that the provinces were raising objection to the Capital Value Tax imposition on land transaction, so it had been shifted to them. Separately, the official sources confirmed that tax authorities had also found that the revenue collection declined after doubling the rate of taxation on land transaction in the shape of the Capital Value Tax (CVT) up to four per cent from the earlier two per cent during the outgoing fiscal year.The FBR had envisaged tax collection of Rs 15 billion with the imposition of four per cent Capital Value Tax (CVT) on land transaction in 2009-10 compared to collection of around Rs 3.5 billion in the last financial year 2008-09 with two per cent Capital Value Tax.
But it ended up with tax collection of Rs 2.5 billion in the outgoing fiscal year, indicating that massive under declaration was the order of the day ast the provinces were collecting more taxes on property transaction but the federal government was unable to get the desired results. Finally, it was decided that the Capital Value Tax (CVT) would be shifted to provinces.
© 2009-2012 TaxRates.cc
2011 - 2012 Tax Rate Guide and Tax Help Website
