Are you struggling to understand the complexities of property taxes in Pakistan? You are not alone. Property taxes can be confusing and intimidating, but understanding them is essential for anyone who owns property in Pakistan. In this article, we will discuss the different types of property taxes in Pakistan, how they are calculated, and the steps you can take to ensure you are paying the correct amount. By the end of this article, you will have a better understanding of property taxes in Pakistan.
What is Property Tax?
A certain amount of money that a landowner has to pay to the government is called Property Tax. property tax includes all kinds of physical assets that you own including any plot in your name, house, office, buildings, farm, etc.
Tax Year in Pakistan
The time span for the tax payment in Pakistan is 12 months Generally the tax year in Pakistan starts on the 1st of July and ends on the 30th of June next year
Types of Property Taxes in Pakistan
Following are the property taxes in Pakistan
- Capital Value Tax (CVT)
- Capital Gain Tax (CGT)
- With Holding Tax
Capital Value Tax (CVT)
Capital Value Tax is levied on the purchaser. When you purchase any kind of property you have to pay a certain amount of money to the government. According to the Finance Act 2006, capital value tax is levied at 2%. According to the budget, the capital value tax is 2% and the stamp duty is 3%
Stamp Duty
Stamp Duty is a tax imposed on the sale, purchase, and transfer of property. The tax is paid by the buyer and is calculated as a percentage of the property’s value. The rate of stamp duty varies depending on the location of the property and the jurisdiction of the local government. Generally rate is around 3% to 5% of the property’s market value.
Capital Gain Tax (CGT)
Capital Gain Tax is the certain amount of money that a seller has to pay to the government when he/she sells their property. The tax is levied on the profit that the seller has gained by selling his/her property. The tax on the property can be levied if the property is sold within the 3 years after the purchase, according to the Finance Act 2017. Tax can be changed every year. During the first year it will be 10%, in the Second year it will be 7.5% and in the third year it will be 5%
Withholding Tax
Withholding tax is an advance tax on other taxes. It is a particular amount that both the buyer and seller have to pay when a property is sold. At the time of the property deal, the seller and buyer pay the Withholding Tax
In Pakistan, if the buyers are filers then they have to pay a 2% withholding tax and if the buyer is a nonfiler, then he has to pay a 7%, likewise, if the seller is a filer then he has to pay 2% withholding tax while if the seller is nonfiler then he has to pay 4% withholding tax
Being a responsible citizen it is obligatory to pay taxes for the development and prosperity of society. If you want to see your country grows and develops, Pay your taxes with honesty
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