Islamabad’s sales and purchases now tax free

ISLAMABAD: Capital Value Tax on the sale and purchase of property in Islamabad has apparently been abolished. This is due to a mistake discovered in the finance bill 2010 recently approved by parliament.

A senior officer of Federal Board of Revenue (FBR) told The Express Tribune that the Capital Value Tax (CVT) has been transferred to provinces under the 18th amendment but that the government forgot about CVT being levied on the sale and purchase of property in Islamabad and ended up not amending the finance bill in that regard.

Authorities say that the implementation of CVT in the capital will now be addressed in the next financial year 2011-12.

Now the FBR has lost its right to collect any sort of CVT over property transfer and any property transfer in Islamabad will now be exempted from CVT. This is because the bill cannot be amended as it became the Finance Act of 2010 after the President signed off on it and it was approved by the Parliament.

“The CVT was transferred to provinces under 18th amendment that is why we forgot to apply CVT in Islamabad which he admitted is a big blunder,” said the official.  He added that conflicts had started emerging in the provinces about the implications of the CVT.

He explained that the CVT has been reduced from four per cent to two per cent but when the CVT was levied by the FBR, it was received on property transfers based on square yards. In contrast, the provinces have levied CVT on square feet. If calculated this exceeds the four per cent that was previously levied by the federal government.

Published in The Express Tribune, July 15^th, 2010.