Property tax in Pakistan
What is a property tax?
Tax is what keeps the country going! The tax is the amount used for the well-being of citizens. So are you paying taxes?
Being a responsible citizen, we have to pay taxes promptly. The tax paid guarantees our economic stability. Many people hide their properties for not paying taxes, which is quite wrong. The property is your country’s heritage and, while you get it, you have to pay the tax honestly. In return, the tax is used for the welfare of the country.
What is a property tax?
Property tax is the amount of money that an owner has to pay. The tax is paid to the government. Taxes help the government to function financially. The amount is used in various sectors, namely: it is used to build infrastructure, increase the required imports and pay people’s salaries, etc.
The term property does not refer only to plots or houses, but to every material thing you have. Concrete aids include your car, your farm, your office building and other items on your behalf. The current percentage of taxes is Pakistan since 2020 is 25%.
Although acquiring such materialistic things is expensive, that is, building your home, the cost of the raw material, the work, the interior, the floor, and others. Many banks in Pakistan offer home equity loans so you can build your home easily.
Tax on the property and our country
If we want to see, Pakistan thrives and advances among third world countries. We have to act now. Property tax is not the same for everyone because the more you earn, the more you have to pay taxes. It maintains a balance between the different social classes of society. The property tax also varies from city to city. Taxes are in one format, so each person pays them easily.
Several people don’t pay taxes, which translates to not so good financial conditions. The government does not have enough money to pay wages, formulate health care, education and safety. Because of these conditions, the government has chosen external sources. This includes borrowing from the International Monetary Fund (IMF) and other countries on the high interest rate.
Pakistan fiscal year
The fiscal year starts from 1st July to 30th June of the following year, ie the property tax, which starts from 1st July 2020, will end on 30th June 2021. For further information, you can refer to the books estate. The books offer an overview of commercial and residential property.
Do you know the types of property taxes in Pakistan?
According to the Finance Act 2006, the person who buys any property will have to pay the value of the capital tax. It is 2% of the total amount registered. The amount is paid to the government during the purchase of the property. The ownership documentation also has capital tax. It is 3% of all legal documentation called “Stamp Duty”.
Capital gains tax
The capital gains tax is on par with the capital value tax. It is the amount that the seller has to pay to the government. The amount is paid when the property is sold. The tax applies to the ownership of the sellers. The tax table changes every year. After three years, the seller is required to pay capital gains tax. While the first year’s tax is 10%, the second year drops to 7.5% and in the third year it is only 5%.
The withholding tax is a merger of capital gains tax and capital value tax. It is the amount that is paid by both the buyer and the seller. It is paid when the property is finally sold.
According to the percentage of taxes, both parties must pay the withholding tax. If the property is deposited on the income tax from the buyer, it remains 2%, but if the buyer is not a filer, the tax increases to 45%. The huge increase ensures that property buyers become tax agents. The same goes for sellers. If they are a filer, they must pay 1% of the tax, but if they are a non-filer, the tax will charge up to 25% withholding tax.
To find out the exact amount of property tax, visit the Pakistan government tax website.
Who is exempt from paying taxes?
Here are the tips of the tax exemption:
- A residential house on an area of less than 5 Marla, which is not also an “A” category, enjoys tax exemption.
- The annual rental of the property cannot exceed 4,320 PKR. It makes it tax free.
- A single house with only 6,480 PKR rent, also occupied by the owner per residence, is exempt from taxes.
- Ownership, including buildings and homes owned by widows, orphans or disabled people with a maximum of PKR 12,150 per year, are exempt.
- Buildings owned by the government or local semi-governmental authorities, e.g. company, social welfare center, municipality or municipal committee.
- Only one property owned by a retired public official with a maximum of 1 channel is exempted.
- Mosques and religious areas are not subject to tax.
- Parks, schools, hospitals, boarding areas and libraries are exempt from tax.
- If the rental of a property is dedicated to the religious or charitable institution, it is exempt from tax.
How to pay taxes:
There are three easy ways to pay property taxes in Pakistan, including:
Tax collection department:
Each province in Pakistan has its own tax collection department. You can easily pay taxes by contacting the tax department of your province and paying taxes following the procedure recommended by them.
Tax collection through banks
Another easy way to pay taxes in Pakistan is through banks. You can do this by generating an online property tax challenger and paying your tax amount.
Online banking system
To make tax payments even more convenient, you can make online payments through online banking systems from the comfort of your own home.
How to calculate your tax?
The government of Pakistan has launched a site to calculate the exact taxable amount for the owners’ benefit. Now you can calculate the tax simply by entering the details. The site is http://22.214.171.124/Calculator
No matter which property you own too much or too little, you should be a responsible citizen. The responsible citizen remains accurate on their tax details. This is an act that builds the country’s economy. If we look at the real estate sector, people like to buy land and houses in several private companies. The companies are Blue World City, Capital Smart City, Multi Gardens, B-17 and Park View. The companies offer a wide range of plot choices from 5 Marla, 7 Marla, 8 Marla to 20 Marlas.
The tax applies to all private / government-owned buyers and sellers. Therefore, if you decide not to pay it, the FBR can take rigorous action against you. The government has simplified the calculation of the tax and payment within the deadlines via banks, tax services or online transfers.
Property prices are rising day by day, so it’s the best investment opportunity you can take advantage of. Today’s investment is tomorrow’s return on investment. For more details on a property please do not hesitate to contact: www.propertynew.pk
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