ISLAMABAD
While approving imposing two percent withholding tax on purchase of property in the upcoming budget, Prime Minister Muhammad Nawaz Sharif has turned down the Federal Board of Revenue’s proposal to acquire private properties at about 20 per cent over and above rates declared in transfer deeds.
Sources in Finance Division have informed that government is considering imposing two percent withholding tax on the purchase of property for those who are not filing their income tax returns. However, the rate of withholding would be only one percent on the purchase of property for those who file their income tax returns. The government wants to bring non-tax filers in the tax net to broaden the extremely low tax base of the country. The government is already charging tax on the sale of properties.
However, sources said that Prime Minister Muhammad Nawaz Sharif has turned down the Federal Board of Revenue’s proposal to opt Indian model to buy the property by paying more than the prices declared in property transfer deeds. The price could be higher up to 20pc compared to the one declared in deed documents. The FBR has prepared the aforesaid plan to stop tax evasion that is estimated at two-thirds of the total potential in the real estate sector. Meanwhile, the government is also considering imposing ten percent federal excide duty (FED) cosmetics, paints and varnishes in coming budget (2014-15). Meanwhile, the FBR is also mulling to introduce new FED structure on lubricating oils. Lubricating oils have been proposed to be subjected to 10 percent FED of the retail price if sold in retail packing and FED at the rate of Rs 7.15 per liter if such oil sold in bulk.
Meanwhile, sources said that FBR has shown its intentions to surrender its powers in the budget to grant tax exemptions that cost billion of rupees every year to the national. Sources added that parliament should grant tax exemptions instead of FBR. The FBR should grant exemptions incase of food commodities prices hike, they added.