How much Taxes & Expenses are payable on transfer of property in Pakistan .Full detail of corruption of Revenue Department & Patwaries.
On property transfer, the buyer has to pay different types of government taxes which have been increasing and decreasing in different periods.
This article will cover this topic in detail. After the establishment of Pakistan, only limited stamp duty was paid on the property registry through stamp papers with 1% municipal tax and no other tax was levied but later various other taxes were also levied along with stamp duty.
The federal government has started levying some taxes on the registry. The provincial government and local government ie TMA Municipal Committee / Corporation / Metropolitan and FBR i.e. Federal Board of Revenue have also levied taxes on property transfer.
In 2010, the federal government also introduced a new type of tax, the CVT. The reason for this was that in order to give more autonomy to the provinces, the 18th Amendment to the Constitution of Pakistan was made, which transferred many other powers and resources to the provincial governments which were previously vested in the federal government. The amendment also gives the provinces the power to collect all taxes on property transfers.
Taxes from property transfers were a major source of revenue for the federal government. Due to low revenue, the federal government illegally imposed first CVT and then FBR duty on transfers. Because only one type of tax can be imposed constitutionally, but the federal government used the excuse of its own income.
But the cost of transferring property to the public has skyrocketed. Which went up to 7 to 8 per cent which was unbearable for the people which made a huge difference in the business of property transfer and also reduced the tax revenue collection of the government.
A year ago in 2020, when the government realized its wrong planning, these taxes were halved. CVT was withdrawn .
The new rates on transfer under the Finance Act 2020 is as follows.
That is 1% stamp duty, 1% for tax filers and 2% for non-filers, percentage. TMA etc 1% duty .. Total 4/3%.For example, a transfer will cost a total of Property worth Rs. 1 million is Rs. 30,000 to Rs. 40,000. As the value of the property increases or decreases, the payment of taxes will also change.
Property transfers are subject to 3% or 4% government taxes but other than that the registry cannot be done without paying a bribe in lacs of rupees to the finance department & Patwari .
Even those with computerized land centers get their hands dirty with corruption and bribery. Sometimes they are caught red handed and later acquitted by most of the courts.
Awareness about the rampant corruption and legal action in property transfer. 👇
Author … Arif karim advocate supreme court. 03225881820.