KARACHI: All persons who have more than one immovable property exceeding Rs.25 million situated in Pakistan shall be deemed to have received rent equal to 5% of the fair market value of the immovable property and shall pay tax at the rate of 1% of the fair market value of the said property.
However, one house of each individual will be excluded. The major part of the wealth of rich people is parked in the real estate sector in Pakistan. This is a double-faceted menace. It leads to the accumulation of unproductive assets and raises the prices of housing for the poor and lower-income groups.
The current challenging times in Pakistan warrant huge sacrifices from the rich and affluent. It is about time that the privileged and affluent sections of society must come forward to play their pivotal role in the socio-economic development of Pakistan.
Government intends to provide a taxation structure where all classes of assets are taxed in an equitable manner. Unfortunately, present taxation regime provides incentives for unproductive investments and taxes heavily the productive sectors. In order to correct this, capital gain all classes of assets is now proposed to be taxed at 15% in case, the holding period of such property is one year or less.
The capital gain payable on such assets will reduce to zero after a holding period of 6 years, reducing tax liability by 2.5 % with each subsequent year. Furthermore, the advance tax rate on the purchase and sale of property for filers is proposed to be enhanced to 2% from the current 1%. Moreover, in order to discourage the undocumented economy, the advance tax rate for buyers of immovable property who are non-filers is proposed to be enhanced to 5%.