KARACHI, June 21: Revenue from registration of property sale deeds fell short by Rs305.5 million during the first 11 months of the current fiscal year which the local revenue officials said was due to a federal levy.
The federal government had imposed a two per cent capital value tax (CVT) on registration of sale deeds in 2007. This is in addition to one per cent tax levied by the local towns. The registration fee for property transactions is one per cent.
Figures released by the inspector general of registration, Hyderabad, reveal that the revenue registered a sharp decline since 2006-07 when the CVT was levied. The collections during the period stood at Rs545.5 million against a target of Rs700 million in 2006-07.
Before the levy of CVT, the Board of Revenue had crossed the target from registration fee and had collected Rs705 million against Rs700 million in 2005-06.
In 2004-05, the registration fee collections also crossed the Rs500 million target by Rs137.5 million, showing a substantial boost in revenue.
In another attempt to cut Sindh revenue, the federal government in 2008-09 budget withdrew duty on electronic transfer of shares, the BoR sources said. This will cut the Sindh revenue by Rs500 million per year.
There is a drastic decline in the number of sale deed transactions of the properties belonging to families.
Accordingly, families while distributing family assets prefer transfering property on power of attorney instead of opting for registration due to heavy load of taxes.
Sources said that federal levies were adversely affecting Sindh revenue.
Citing an example, they said that the Centre persuaded the province to cut stamp duty rate from nine per cent to three per cent and registration fee from three to one per cent in the interest of providing relief to the people.
However, when rates of provincial levies were reduced, the federal government imposed a two per cent CVT to boost its revenue.
Estate dealers confirmed that the levy of CVT had adversely affected their business as their clients were reluctant to register properties due to heavy taxes, pushing the cost in thousands.
Raja Masher, President, United Defense Clifton Estate Agents Association, said that many estate agents have transferred their businesses to Dubai due to slowdown in property business due to high taxes.
Member Stamp Duty and Registration SBR Iqbal Ahmed Bablani told Dawn on Friday that the inspectorate had taken steps to streamline collection of revenue through facilitation.
The registration process has been computerised, which has cut delivery time for registration certificates considerably, which earlier took months through manual processing system.
The department is compiling data of properties registered with the SBR.
In case of dispute on property ownership, it would be easy to retrieve copy of any sale deed transaction.