BADIN, Oct 1: People in general and traders in particular have criticised the levy of Capital Value Tax (CVT) on transactions of immoveable property in urban areas.

They urged the prime minister to give relaxation in provincial taxes levied on the transfer of property and land at least in Badin district which had been declared calamity-hit following the recent rain.

The Central Board of Revenue through a notification dated June 28, which took three months to reach here, imposed two per cent CVT on recorded value of property measuring at least a kanal or 500 square yards in urban areas.

The CVT was applicable to commercial area of any size, it said.

It said that Rs50 per square yard would be recovered where value of immoveable property was not specified in the document of sale, gift, lease, attorney powers or any other deeds before its registration.

The notification clarified that the urban area meant Islamabad capital territory, a cantonment board or a municipal body, in case of Karachi up to 40 kilometre from the outer limit of municipal or cantonment limits, in case of Lahore and Faisalabad up to 30 km and in other cases up to 10 km from outer limits of municipal bodies or cantonment boards.

Laar Abadgar Association president Jabbar Gopang termed the new tax ‘inimical’ towards investors and development as it would only serve to discourage people from purchasing property and investing money.

The government had already imposed heavy taxes on a purchaser on the transactions of properties, which included one per cent registration fee charged on the total value of property, two per cent taluka municipal authority fee, three per cent stamp duty with increased rates of assessed value of properties fixed by the provincial government on various categories, he said.

He said that with all the taxes the two per cent CVT might prove to be the last straw.

He said that if a person purchased a piece of commercial plot for Rs100,000, he would have to pay eight per cent which came to Rs8,000 to the government in the shape of taxes besides bearing one per cent i.e. Rs1,000 extra expenses, which covered bond writers fees etc.

Mill-owner Rajesh Kumar said that the CVT on documents of lease and general power of attorney where value was not specified, would prove more detrimental to traders as it would be charged at the rate of Rs50 per square yard.

The tax itself would exceed or equal the actual price of land in some areas which was totally unjustifiable, he said and added that if one executed power of attorney for his immoveable property of 5,556 square yards in favour of a bank only to seek a loan, he would have to pay Rs277,800 CVT over and above other charges.

“The tax effectively discourages a trader from seeking bank loans to improve his business,” he asked.

Dileep, another miller, said as he related his story that he secured loan from the NBP Badin last month after executing his general power of attorney, as required by the bank, but the bank authorities were now pressing him to pay CVT which came to more than Rs300,000.

“Had I been told in advance, I would not have applied for the loan in the first place,” he said.

He said that if he was forced to pay he would seek justice from a court of law.

They demanded that the president, prime minister and chief minister order the CBR to withdraw the tax and grant them relaxation in other provincial taxes as well.