June 02, 2007	Saturday	Jamadi-ul-Awwal 16, 1428

ISLAMABAD, June 1: The two per cent capital value tax (CVT) being indiscriminately collected by the Central Board of Revenue (CBR) on mortgaging of property and granting of power of attorney is causing distress all around, particularly among senior citizens and widows.

A very nominal revenue has been collected from the tax which was levied in the budget 2006-07.

The affected people have appealed to the government to abolish the capital value tax on transfer of property through power of attorney, saying it has badly affected spouses, parents, grandparents, brothers, sisters, aged widows, uneducated women and those unable to manage their property matters in courts.

They pointed out that in no way a power of attorney involved financial transaction as it did not transfer propriety rights or changed the title of property. It only facilitates handling of property. Such a policy only adds to the burden of the already hard pressed common man, the affected persons say.

Though the government’s objective in levying the tax on land was to generate revenue and plug the loopholes big land investors benefit from; they said the policy would discourage the youth to fulfil their obligations towards their old parents and those who cannot manage the intricate property matters by themselves.

A number of people interviewed by Dawn said the two per cent CVT was being charged regardless of the fact whether a financial transaction took place in land deals or not.

Besides, the tax is unjustifiably charged twice. First the provincial revenue officials charge the two per cent CVT on all power of attorneys whether given to any blood relative or others, and again the same is charged at the time of sale or transaction of the property, they said.

People executing mortgages too are made to pay the same tax twice - first on relinquishing their propriety rights to obtain a loan and then clearing that loan to regain their mortgaged property.

It was proposed that capital value tax exemption should be given on the power of attorney awarded for obtaining a loan by mortgaging property, and in cases where it was awarded for surrendering property to institutions cantonments/towns for public welfare projects such as building schools, colleges, dispensaries, roads, etc.

An aggrieved person narrated to Dawn his woes after his aged father gave him the task of looking after his land and other property matters.

“When I presented my power of attorney to the revenue authorities, they instructed me to pay approximately Rs170,000 per kanal as capital value tax,” he said requesting anonymity.

He wondered if the financial wizards who proposed this levy ever reflected on the socio-religious obligations of a citizen.

Other anomalies pointed out in the CBR’s policy related to extending the definition of urban areas up to 10 kilometres from the outer limits of municipal bodies and cantonment boards.

Municipal bodies exist no longer and the definition would make villagers liable to pay CVT without distinguishing between towns and villages.