Valuation rate of property raised

ISLAMABAD: The government in the Budget 2019-20 has proposed to raise the valuation rate of immovable property up to 85 percent of the market value and no capital gains tax will be charged if a property is held for more than 10 years.

The Salient Features of budget document say: At present capital gain on immovable properties is subject to separate taxation on the basis of holding period of property. The tax rates are 10%, 7.5% and 5% for holding periods less than one year, between one to two years and between two to three years respectively.

There is no tax if the property is held for more than three years. In order to check tax evasion and to ensure equal taxation of all incomes, income from capital gains is being brought under the normal tax regime and taxed at normal rates.

However, to account for the time value of money, the gain on open plots would be reduced on the basis of net present value so that where the holding period is upto one year the full gain will be taxed.

Where the holding period is between one to ten years, 75% of the gain shall be taxed and there will be no tax in case the holding period is more than ten years.