Basic threshold enhanced from Rs3 to 4m
Islamabad—Negotiations between the Finance Minister Ishaq Dar and property dealers on the issue of valuation of property also concluded successfully, with both sides agreeing to the role of the Federal Board of Revenue (FBR) in the determination of fair market value of property.
Both sides agreed on enhancing the basic threshold of Rs3 million for application of withholding tax on purchase of immovable property enhanced to Rs4 million as well as on the promulgation of appropriate legislation to give effect to the proposed changes as agreed with all stakeholders.
He said that tax would be applicable if property bought on or after July 1 this year and sold before the passage of three years. He said that it was also agreed in the talks that withholding tax would be applicable on properties worth Rs0.4 million, and not Rs0.3m as previously proposed.
According to Finance Minister, both sides agreed on valuation for major cities, valuation tables will be notified by FBR instead of valuation by SBP approved evaluators, applying DC rates for those areas for which no valuation tables are notified.
Moreover, both sides also agreed on reducing period for capital gain tax (CGT) from five to three year, waiving CGT on property held for more than three years. Moreover, both sides also agreed to levy CGT on properties acquired on or after July 01, 2016 as per following rates.
Moreover there will be 10 per cent CGT on properties if holding period is up to one year, if holding period is between one to two years then there will be 7.5 per cent CGT as well as there will be five per cent capital gain tax on property with holding period is between from two to three years.
There will be zero rate of CGT on properties with holding period more than three years.
Meanwhile the Finance Minister announced that the government has decided not to increase the prices of the petroleum products for the month of August.
While addressing a press conference here Finance Minister said that the prices of five petroleum products shall not be changed during August as per the instructions given by Prime Minister (PM) Nawaz Sharif.
Oil and Gas Regulatory Authority (OGRA) forwarded a summary to Finance Ministry on Friday regarding the increase in the prices of petroleum products. OGRA suggested an increase of Rs2.12 in the price of petrol; Rs 0.26 increase in the price of high-speed diesel whereas an increase of Rs3.94 was suggested in the price of kerosene oil. It was also suggested by the institution that the price of High octane be increased by Rs0.60 whereas the price of light-speed diesel be lessened by Rs1.24.
He said that the federal government had decided against raising the tariffs of petroleum products despite Oil and Gas Regulatory Authority’s (OGRA) recommendation to raise prices, but OGRA’s summary was rejected after Prime Minister Nawaz Sharif directed not to raise the prices. He also claimed petroleum prices in Pakistan were the lowest in the region adding that the current petroleum prices would remain unchanged until August 31, 2016.