ISLAMABAD, Aug 20: The federal government has decided in principle to revise rates of immovable property and asked the provincial governments to propose new rates for the levy of capital value tax (CVT) and stamp duty.

The decision came at a time, when the boom in the property either fell down or stagnated due to slowdown in the economy in the past few months.

A senior income tax official told Dawn on Wednesday that the present rates were very nominal yielding very lesser revenue for the government. It has been observed that the values of property fixed for calculation of taxes is still very low like in thousands, while property market value is in millions.

“The provinces will now propose new rates, which will be finalised after discussion with all relevant stakeholders, he added. Provinces collect capital value tax on behalf of the federal government on transfer of property.

The provincial governments have also been asked to direct the excise and taxation departments for effectively monitoring and collecting the withholding tax on registration of new cars, added the official.

An official announcement issued here said that the Federal Board of Revenue (FBR) has requested the chief secretaries of all the four provinces to respond at the earliest on the federal cabinet’s decision to review the existing valuation rates of the immoveable properties in their provinces for the purpose of transfer of such units.

Following the observation of the federal cabinet in its meeting held on June 11, 2008, that valuation rates of immoveable properties did not commensurate with the fair market value of such units, the federal finance minister in his letter dated June 16, 2008, had also requested the chief ministers of all the four provinces to review and rationalise the existing values fixed for the purpose of their transfer.

The revision of the existing fixed rates was supposed to be completed during the month of June and was to be made effective from July 1, 2008.

Member (Direct Taxes), FBR, in his separate letters issued on August 13, 2008, has also requested all the chief secretaries to look into the matter personally and do the needful at the earliest, added the announcement.