June 11, 2008	Wednesday	Jamadi-us-Sani 06, 1429

KARACHI, June 10: Stamp duty collection is likely to suffer a shortfall of Rs1,471 million during the current fiscal year against a target of Rs5,500 million.

The shortfall has been attributed to Capital Value Tax (CVT) and municipal taxes levied on registration of sale deeds of properties, in addition to a KBCA binding on transfer of property.

Statistics revealed that the total collection from stamp duty during the first 11 months (July-May) of 2007-08 stood at Rs3,751.2 million against Rs3,425 million collected during the same period last year.

The Sindh Board of Revenue hopes to collect around Rs276 million in June, which would take the total revenue to Rs4,028 million, leaving a shortfall of Rs1,471 million.

The stamp duty is levied on property sale deeds at the rate of three per cent; property leases 1.5 per cent and share transfer at the rate of 1.5 per cent on physical transfers and 0.10 per cent on shares transferred through the Central Depository Company.

Sources said that sale of stamps for duty has declined considerably for the last two years because of two factors: the condition of KBCA NOC for transfer of property and levy of two per cent capital value tax by the federal government in 2006.

In addition to this, there is one per cent municipal tax charged on sale deeds.

Sources said that the CVT and municipal tax had considerably increased the cost of registration of property, cutting down the number of sale deeds annually. Stamp duty on sale deeds contributes 50 per cent of the total revenue of the department.

The sources maintained that the shortfall is due to extraordinary high revenue target (Rs5,500 million) fixed for the current fiscal year compared to Rs4,800 million last year.

While the stamp duty rates were lowered during the past from nine per cent to five per cent and finally to three per cent, the finance department increased the target without taking into account the KBCA binding and the CVT and municipal tax on registration of properties.

In view of boom in prices of property units in urban area, the department revised the valuation table upward and enhanced value of residential units by 10 per cent, commercial and industrial units by 15 per cent. The move was aimed at brining the valuation rates, on which stamp duty is charged, at par with the rates prevailing in the market.

The board also introduced for the first time valuation rates for agriculture lands in Dehs around Karachi, whose rates increased substantially with the high property rates prevailing in the city area. The value of agriculture land at Deh Drigh Road was fixed at Rs6 million per acre, and Rs24,000 to Rs80,000 per acre in Dehs situated far from the city on Super Highway.