ISLAMABAD: Federal Finance Minister Ishaq Dar on Sunday stated Capital Gain Tax (CGT) will not be applicable on sale of plots of land given to personnel of the armed forces.

"CGT will not be applicable on the sale of plots given to personnel of the armed forces," said the finance minister while addressing a press conference.

The federal finance minister also stated CGT will not be applicable on the first sale of plots given to the dependents of armed forces personnel who have been killed in the line of duty.

"When a plot of land is sold by the dependents of martyrs for the first time, CGT will not be applicable," added Dar.

Previously the CGT was being charged as per the property evaluation table notified by the district collectors (DCs). The rates of property in the official evaluation table are usually 40pc-60pc lower than the actual market price.

Earlier, Dar also announced that in future, property valuation tables will be notified by the Federal Board of Revenue (FBR).

The FBR will now determine the prices of property and all transactions will be done through a transparent process.

CGT on property is raised to 7 per cent for one to two years and 5pc for 2 to 3 years of ownership.

Major points of CGT

• 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 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.