MUZAFFARABAD: The Azad Jammu and Kashmir (AJK) government has formally notified a seven-member committee to “evaluate and examine” recommendations by a senior official for rationalisation of stamp duty and other local taxes.

In its session on December 12, the AJK cabinet had decided in principle to scale down the ratio of stamp duty, taxes and levies on land transfer through registration or gifts in order to bring them at a par with Punjab, with which AJK claims parity in almost all matters.

Earlier, the cabinet was given a presentation on the subject by Senior Member Board of Revenue (SMBR) Fayyaz Ali Abbasi that included comparison of the rates with Punjab.

Though the cabinet had decided and announced that the committee would present its report within a month, it took the government almost five weeks to issue a formal notification about the constitution of the committee.

The committee is headed by Minister for Finance Dr Najeeb Naqi and includes Minister for Revenue Sardar Farooq Sikandar, Minister for Youth, Sports and Culture Chaudhry Mohammad Saeed, the SMBR and secretaries for finance, law and local government and rural development.

When contacted, SMBR Abbasi told Dawn that the Stamp Act 1986 was amended in Punjab and same amendments were replicated in AJK in 2000, empowering the deputy commissioners to issue valuation tables.

Besides, the powers of commissioner were also reviewed.

Mr Abbasi said while the rural areas of Punjab were also brought under purview of this Act in 2010 same amendments were replicated in AJK in 2017.

Under the new amendments, old procedure of assessment of value was abolished and instead locality-wise tabulation was introduced for the purpose. However, all these measures were yet to be enforced, he said.

The official said while the taxes in Punjab were 9pc in urban and 6pc in rural areas, ratio of taxes in AJK was 16.5pc both in urban and rural areas.

He said he had suggested at the cabinet meeting that the ratio of taxes in AJK should be 6pc for both the urban and rural property, as the urban areas of AJK were almost equal to the rural areas of Punjab.

Similarly, registration fee should be fixed at Rs1,000 per instrument instead of 1pc of the total cost, he said.

Mr Abbasi said he had also suggested rationalisation of local taxes and uniformity of rates, including reduction in rate of education cess and advance tax.

He explained that local councils, particularly the municipal corporations and district councils, all over AJK were charging additional levies ranging from 3pc to 7pc, which was harsh and unilateral and needed to be revised.

Besides, he said, it needed to be collected on the basis of a uniform formula both for urban and rural areas. He said he had also suggested that instead of collecting individually, the local councils could get the share from the overall income through a centralised mechanism.

He said since no taxes were being received on sale and purchase of property in rural areas, imposition of rationalised tax regime there could also compensate the overall income loss due to reduced ratio in urban areas.

A lower tax rate would become an incentive for people to get the sale deeds registered and would have a healthy effect on government revenues.

Mr Abbasi said he had also recommended preparation of locality-wise valuation tables to be effective from Jan 2018. Rationalised land valuation rates would also serve as extra incentive for registration of deeds, apart from reducing the cost of land acquisition for public purposes in future, he said.

Published in Dawn, January 19th, 2018