GUJRAT: The ambiguity over the fate of the Capital Gain Tax
(CGT) imposed by the Federal Board of Revenue (FBR) on the sale and
purchase of the properties, was causing a sharp decline in the revenue
the provincial government and tehsil municipal administrations (TMAs)
would earn through taxes on such transactions and real estate business.
According
to sources, the FBR move has brought to a grinding halt the routine
business at the registration branches as well as computerised land
record centers (CLRCs) in the three tehsils of the district for the last
three weeks.
Since the FBR on July 1st had notified the
imposition of 10 per cent CGT on the 100pc market price of any property
sold within five years of the purchase to generate revenue from
realtors, after the measure was introduced in the recent budget, both
the seller and purchaser have been avoiding to get properties ownerships
transferred, causing a sharp decline in the real estate business as
well as government revenue.
Few property mutations in Gujrat since FBR measure
Previously the CGT was being charged as per the property
evaluation table notified by the district collectors (DCs). The rates of
property in the official evaluation table are usually 40pc-60pc lower
than the actual market price.
However, in case of Gujrat
city and its suburbs, in most of the commercial and some residential
areas the property rates in the DC’s evaluation table are much higher
than the actual market price.
According to the local
real estate agents association, that was already struggling for lowering
of these rates, the FBR measure could prove disastrous for their
business.
Gujrat is also among the 18 districts which
where the real estate associations have demanded the FBR should bring
down the ratio of collecting CGT, instead of charging it on 100pc market
price of property. They had proposed that if necessary the tax should
be enhanced gradually so that their business could survive.
A
senior official at the local land revenue department told Dawn that in
the first two weeks of July, the registry branches as well as the CLRCs
witnessed “zero activity” in terms of mutation of property due to the
FBR’s decision.
Even, in the last one week (from 17 to
24 July) only three to four mutations were witnessed per day, he said,
adding that before the FBR move there used to be around more than two
dozen mutations a day in Gujrat and Kharian tehsils of the district.
He
apprehended that if the situation persisted, the provincial government
as well as the TMAs could face huge losses in terms of revenue, making
it hard for them to achieve their respective revenue targets under this
head.
According to him, only Gujrat TMA used to generate
around Rs160 million annually, spending the sum on the provision of
basic amenities to the citizens.
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