Islamabad: The government may rationalize the realty sector tax regime in the next budget to generate Rs8 billion in additional revenues – a sum that is hardly 27% of what it can get by bringing property valuations of only Islamabad closer to fair market prices.
According to finance ministry officials, profits of more than Rs20 million from immovable property may be taxed under the standard tax framework in order to collect an additional Rs4 billion in taxes. Currently, the Capital Gains Tax (CGT) rate for the highest income bracket of more than Rs15 million is merely 10%.
In comparison, a salaried individual pays 27.5 percent of his yearly income in taxes if his yearly income is between Rs12 million and Rs30 million. Similarly, officials claimed the government was going to rationalize the income tax rate on rental income from the property to raise an additional Rs4 billion. The total gain from these two initiatives is less than Rs8 billion in the fiscal year 2021-22, which is just 27% of what the government is losing owing to unreasonable adjustments in property valuation prices in Islamabad’s suburbs.
According to Islamabad Deputy Commissioner Hamza Shafqat, the property value rates have been revised in response to court decisions and parliament directives, as well as over 300 referrals made against January 2020, declared values. He stated that a committee had been constituted to investigate and that the rates for January 2020 were excessive.
He stated that an internal exercise was conducted again, and tariffs were compared with Rawalpindi before being changed with the government’s approval. The NA Standing Committee on Interior suggested lowering tariffs, which the government also accepted, said Hamza Shafqat.
For the sake of a $500 million loan, the World Bank has also placed a condition that the provincial authorities would adopt the FBR rates. Instead of implementing these rates, the ICT administration has substantially decreased them, resulting in an Rs30 billion annual revenue loss.