Pakistan nation is moving under a new government with higher expectations, unfortunately, its economy is facing hard luck these days. On 11 June 2019, Government announces their first complete financial budget of Rs 7.022 trillion for the year 2019-20. It is presented by Minister of State Of Revenue Hammad Azhar. According to government officials claimed that budget will be relaxation for the people of Pakistan.
Government is also looking to increase tax collection up to 5.5 trillion to meet their expense. One day before announcing Budget Pakistan Army also support the new government by deciding not to increase the defense budget. This decision is appreciated by PM Imran Khan and the nation as well. The government also looking to focus on Agriculture as it is considered as the backbone of the economy of Pakistan. The country also facing inflation as well as high raise in the value of the dollar and circular debt.
The government has allocated
1,152.5 billion for defense,
2891 for payment against the loan,
421 billion for pension,
272 for subsidy
431 billion for running the civil government
Whereas the government expecting the following receipts,
1892 external receipts,
3462 net receipts,
5822 billion tax revenue,
833.4 capital receipt,
6716 gross revenue as major receipts.
The minister said that total revenue will be expected 6.717 trillion which is 19 percent higher than the previous one and the total deficit will be 3.56 trillion. Overall it is a good budget and the government actually try to overcome their expenses with revenue.
If we talk about the taxes on the property after budget there are some major changing in 2019-20 from Property Tax 2018-19 which have an effect property business. If you are attached with the real estate business you must be aware of all the new changes and up gradations.
Here are the following major changes in Property Taxes in the year 2019-20.
According to the new tax year, property tax will only be charged if the property value is exceeding more than 5 million. Before this budget buyer and seller use to negotiate between each other and rather than paying tax on the actual price they use to set the low price with mutual understanding to save money. By keeping this in mind government will now charge tax on a set market value which is already increased and 85% closed to real value, Now in every situation buyer and seller have to pay tax close to real market value.
Facilitation to Non-Filer
The best thing is that now non-filer can also purchase and transfer property to others, this step is taken to encourage investment and growth in the property business. Now when non-filer buys or sells properties they can easily transfer. This step is taken to encourage property business in Pakistan. Usually, in Pakistan, small business owners use to buy and sell the property for earning and now they can easily continue their business.
Immovable Property Tax
In budget 2019-20 government has also decreased tax on the immovable property from. This is again to encourage sale and purchase. The more the sales the more government can get tax from it. In previous, it was 2% and now it is decreased to 1% as a rebate to the buyer and seller.
Budget for ongoing Housing Projects
Government has allocated 2843.094 for an ongoing housing project. The country needs more houses than currently produced. The government on their own behalf want to provide housing facility to the nation. They have given a budget under the public sector development program.
Types of Property Tax
Here are some of the different types of property you need to understand if you are related to property business.
Capital Gain Tax
This tax is on capital assets, especially on property. It is a federal tax paid by the seller of the tangible asset. When the seller makes a profit on selling a particular property. It will be charged on the property sold in less than 3 years so if you are engaged in short term property business you will have to pay tax up to 10% depends upon the time interval of possession of the property.
If you as a seller hold the property for more than one year than tax percentage will be decreased accordingly and in vice versa.The more long duration of possession you have the less will be the tax.
There is always a large gap between the actual market value of the property and the value on which buyer and seller use to pay tax. Government has taken an initiative by increasing the basic market value up to 85% close to real value. Now If anyone buys and sell properties in t cities mentioned below will be charged tax according to new rates mentioned in FBR websites. It is increased in 21 main cities up to 20% and now everybody has to pay more taxes. These prices are called valuation rates for property taxation. Friday FBR announces rates for following cities.
Abbottabad, Bahawalpur, Faisalabad, Gujrat, Hyderabad, Islamabad, Jhang, Jhelum, Karachi, Lahore, Mardan, Multan, Peshawar, Quetta, Rawalpindi, Sahiwal, Sargodha, Sialkot, Gujranwala, and Sukkur.
These taxes are charged to both buyers of the property as well as to the seller however the amount of tax charge differs for both parties. Buyer has to pay 2% of property value if he is already a tax filer and 4 % if he is not a filer. On the other hand, the seller will pay 1% if he is a filer and 2 % in case if he is not a filer, however, property value should be more than 5 million. Remember property value will be according to new valuation value decided by FBR.
Government has taken some positive steps in Budget 2019-20 to encourage property business in Pakistan however due to high inflation and external debts clearly the government is looking to increase its tax collection so they can meet their expenses and external debts. We can say still it’s a great time for investment in property and you can use Pakistan’s best property portal to get instant access on best property deals in all over Pakistan.