The two percent capital value tax (CVT) on immovable property would be collected on property transactions in the federal capital in the same manner as was being previously collected. Sources told Business Recorder here on Friday that the FBR would issue an explanatory circular for the collection of CVT on immovable property from July 1, 2012.
The income tax circular would also clarify the CVT collection mechanism as admissible under the law. Prior to budget (2012-13), the CVT on immovable properties was not levied in Islamabad Capital Territory. During budget, the government has imposed the CVT on transactions of immovable properties in Islamabad with identical structure adopted by the provinces.
Details revealed that the CVT is payable on the acquisition of immovable property and is levied on its value as recorded in mutation deed, registration deed, or power of attorney. The recorded value is mainly based on the valuation rates fixed by provincial governments for the purpose of collection of stamp duty.
There was no CVT on transfer of immovable property within the jurisdiction of federal capital following withdrawal of the CVT on buying and selling of property in capital territory through Finance Act 2010. Under the said Act, the property buyers in Islamabad were exempted from CVT. Through Finance Act 2010, the FBR had made it mandatory for the registrars of the property to submit quarterly statements with the particulars of the buyers and sellers of property in their respective provinces. The data submitted by the property registrars would help in cross matching of information to verify whether the buyers/sellers are within the tax net or not.
Under the new Finance Act 2011, the purchasers of the immovable property including commercial and residential property within urban areas are required to deposit the CVT. The purchasers of the immovable property including commercial and residential property of specified sizes within urban areas are required to deposit the CVT. The purchaser would complete the basic information and submit the same to the concerned registration authority for valuation of the property for CVT purposes. The purchaser would deposit the amount in the relevant bank where bank staff would feed particulars in system for issuance of the computerised payment receipt (CPR). The purchaser would submit the copy of CPR along with CVT form to the registration authority.