Capital gain tax rates enhanced on disposal of immovable properties

Capital gain tax rates enhanced on disposal of immovable properties

ISLAMABAD: The Federal Board of Revenue (FBR) has said that the rates of capital gain tax (CGT) on disposal of immovable properties have been slightly enhanced through Finance Act, 2021.

The FBR in its explanation to changes made through Finance Act, 2021 in Income Tax Ordinance, 2001, said that a separate block of taxation of capital gain on the sale of immoveable property is available under the Ordinance.

The gain arising on the disposal of immovable property for more than 4 years, is not taxable.

The capital gain arising on the disposal of immovable properties is taxable to extent of 100 per cent, 75 per cent, 50 per cent and 25 per cent, if property is sold within 1, 2, 3 and 4 years respectively.

The gain so calculated on the basis of holding period was taxable at the rates ranging from 2.5 per cent to 10 per cent. Now these rates have been slightly enhanced through changes in Division VIII of Part I of First schedule of the Ordinance, however, the holding period concession remains intact.

―Division VIII

Tax on capital gains on disposal of Immoveable Property

The rate of tax to be paid under sub-section (1A) of section 37 shall be as follows:-

TABLE S.NoAmount of GainRate of Tax
(1)(2)(3)
1.Where the gain does not exceed Rs. 5 million3.5 per cent
2.Where the gain exceeds Rs. 5 million but does not exceed Rs. 10 million7.5 per cent
3.Where the gain exceeds Rs. 10 million but does not exceed Rs. 15 million10 per cent
4.Where the gain exceeds Rs. 15 million15 per cent

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