Taxation policy is the rule that is set by the government who will pay the tax and how much? Do you want to invest in B17 Islamabad? Government imposes the new tax policies on the real estate sector in the 2022-2023 annual budget. It has the aspects of macroeconomics and microeconomics. The main reason to pay the tax is to generate high revenue for the activities done by the government and avoid to influence personal decisions and business. The tax system does not slow down or less the economy’s productive capacity.
In the new annual budget, the government introduces the new tax named “Deem Tax” and also increase the capital gain taxes and the advance that were already applied on the selling and buying properties. In the real estate sector, 440 billion in new tax is imposed. The Chairman of the Federal Board of Revenue (FBR), Asim Ahmad approve this budget. He also tells the press that 316 billion tax will be imposed on real estate next year.
Effect of tax policy on the real estate
These new taxation policies are just discouraging the investors and providing the authority to the public to buy a property. Not a huge amount of revenue will be generated from these policies. A person with multiple now intends to contribute to the country's economy through taxes. Apartments for sale are available in Islamabad. Overseas Pakistani buy the property in Pakistan for future residence and for investment. These high taxes may be the reasons discouragement for them.
A person who wants to invest in any property, they to pay the 3 taxes:
When they are purchasing the property, pay the 2% advance tax
If they sell the property before 6 years then they need to pay the tax CGT, which is 15%
FBR value annually is 1%, due to expected income on the property
Let’s discuss all the taxes in detail
Deem Tax
This tax is applied on the unused property, generating no regular income, and worth more than 2.5 crores. It contains all the kinds of unused properties, land, houses, shops, everything. If the cost of your plot is 5 crore, then the government will consider the income on this is 25 lacs and from which 20% of the amount will be taxed. This tax is applicable to a person which has multiple properties. Get your first property, and apartments in Islamabad on installments.
Capital Gain Tax
This tax is applied on the property when you are going to sell it after buying. Its duration is increased to 6 years and its value decreases with time. Like, if you want to sell the property within one year after buying then you need to pay the tax of 15%, if after 2 years then 12.5%, after 3 years 10%, after 4 years 7.5%, after 5 years 5%, after 6 years 2.5% and after that, you don't need to pay any tax on selling your property.
Advance Income Tax
On immovable property, the new tax announced for the filers is 2% and for the non-filers is 5%. They must pay this tax at the time of buying a property. This tax rate affects the activity of sales and purchases adversely and property buying rates are growing. Such high taxes will become the reason for the reduction in investment incentives.
This new taxation policy introduced by the federal government for the year 2022-2023 discourages real estate investors. The cost of construction is also shaking hands with the sky. If this continues, builders will also stop their work and the economy will be at a loss.
The Cloud Services:
Construction has been our core business for past many years, however the evolution of our business has differentiated us beyond just what we do. The Cloud Services is a Property Development Company, aiming to deliver affordable homes and properties for all classes of people living in Pakistan. Our key differentiation is innovation in our projects through the Energy Efficient technologies introduced by the best of the civil Engineers and Unique designs made by spending more man hours on Planning and Designing. The Cloud Services is fast becoming a specialist in providing western style living options here in Pakistan with the use of premium quality material that is a signature of the services we are providing. We believe in providing quality work to our customers that speaks for itself.
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