ISLAMABAD: Federal Finance Minister Ishaq Dar on Saturday announced that in future property valuation tables will be notified by the Federal Board of Revenue (FBR).

Talking to media after holding successful negotiations with Federation of Pakistan Chamber of Commerce and Industry (FPCCI), Dar said that according to new rules FBR will determine the prices of property and all transactions will be done through a transparent process.

"Capital tax gain on property is raised to 7 per cent for one to two years and 5 per cent for 2 to 3 years of ownership," said Ishaq Dar.

Flanked by FPCCI president Abdul Rauf and other notables from the industry, the finance minister added that property seller will be taxed if he is selling it within 5 years of buying that property.

"Those who have bought property before July 1 can sell it in 3 years without being taxed but if they do it before the time, they will have to pay 5 per cent of that amount in tax," said the minister.

Major points of discussion

• Valuation has been agreed for major cities

• Evaluation tables will be notified by FBR instead of valuation by SBP approved valuers

• Till such time and for those areas for which no valuation tables are notified, DC rate will apply

• Holding period for CGT(capital gain tax) has been reduced from 5 to 3 years

• There will be no CGT on property held for more than 3 years. Properties acquired on or after 1st July 2016:

  • If holding period is up to 1 year – CGT 10%
  • If holding period is between 1 and 2 years – CGT 7.5%
  • If holding period is between 2 and 3 years – CGT 5%
  • If holding period is more than 3 years – CGT 0% / exempt

• Properties acquired before 1st July 2016:

  • If holding period is less than 3 years – CGT 5%
  • If holding period is more than 3 years – CGT 0% / exempt

• Valuation will apply on (i) CGT (ii) withholding taxes (iii) for the purposes of sec 111.

• Basic threshold of Rs3 million for application of withholding tax on purchase of immovable property enhanced to Rs4 million.

• Appropriate legislation will be done to give effect to the proposed changes as agreed with all stakeholders.