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Who is the winner of realty tax talks

+2 votes
asked Jul 31, 2016 in General advice by hotuser (2,100 points)
edited Jul 31, 2016 by hotuser

I think, we all know the new proposed taxes after govt/stakeholder talks conclusion. Lets try to understand the tax with an example.

Take an example for 10 million (new valuation price) property transaction for which has DC rate of 5 million. Below will be the total tax for buyer and seller.

Buyer Non Filer
Stamp duty 3% on dc rate: 3 lacs
CVT 2% on dc rate: 2 lacs
WHT tax 0.6% on valuation price: 60 k
Advance tax 4% on valuation price: 4 lacs
Total:9.6 lacs

Buyer Filer
Stamp duty 3% on dc rate: 3 lacs
CVT 2% on dc rate: 2 lacs
WHT tax 0.3% : 30k
Advance tax 2% on valuation price: 2 lacs
Total: 7.3 lacs

Seller Filer
WHT 0.3% of valuation price: 30k
Advance tax 2% of valuation price: 2 lacs
CGT (Filer) 10% first year : 5 lacs
CGT (Filer) 7.5% second year : 3.75 lacs
CGT (Filer) 5% third year: 2.5 lacs

Total if sold before June 30 of next year: 2.3 lacs
Total if sold within 1 year after june 30: 8.3 lacs
Total if sold within 1 to 2 years: 6.05 lacs
Total if sold within 2 to 3 years: 4.8 lacs  
Total if sold after 3 year: 2.3 lacs

Seller Non-filer
WHT 0.6% of valuation price: 60k
Advance tax 4% of valuation price: 4 lacs

CGT is 0 for non-filers, so the holding period doesn't matter.

If sold before June 30 of next year: 4.6 lacs
If sold within 1 year after June 30: 4.6 lacs
If sold within 1 to 2 years: 4.6 lacs
If sold within 2 to 3 years: 4.6 lacs  
If sold after 3 year: 4.6 lacs

So, this is how much government will get which is almost the same or more compared to developed countries.

I'll leave it to you to decide who is the winner!

3 Answers

0 votes
answered Jul 31, 2016 by ali (880 points)
The arrangement is made to safeguard black money and is really giving not much advantage to the tax filers.

Pakistan real estate is paying more taxes than even developed countries and what the nation is getting in response ? We all know how much is spent on health, education and basic needs of a common man.

The prices may rise once the market recovers as the transaction cost has increased a lot now.
0 votes
answered Jul 31, 2016 by tepu (730 points)
Most of the real estate stakeholders are definitely praising this move and to an extend they're right.

The increase in taxes may increase the property price to add the transaction amount to it which will make it very difficult for a middle-class man to own a property.

But who cares about a common man!
0 votes
answered Jul 31, 2016 by tepu (730 points)
Government/black money mafia is the winner and a common man is a loser!

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