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CGT,

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   MALIK®
Friday, July 1, 2016 04:02 AM 
Reply: >
Salam
Everyone seems to be confused like me , will CGT be on plot price or profit? in stock market cgt is given on profit, can someone please shed light on this matter.
Thanks
User_6006® replied on Friday, July 1, 2016 04:22 AM 

everyone should go to facebook and search ishaq dar and than copy paste this message to his inbox or wall

you son of a pig , thief , corrupted person who admitted money laundering in past, who were you a moonshi , now doing day light robbery with people of Pakistan on name of taxes you are robbing people , people should drag this pig in street and shoot him .may ALLAH curse you .
MALIK® replied on Friday, July 1, 2016 04:53 AM 

In its true sense the meaning of CGT means tax on profit gains, but as NOORA LEAGUE are a bunch of idiots you.never know what they will make out of it
Khawaja Qasim® replied on Friday, July 1, 2016 05:02 AM 

Before 1 Jul 2016 i.e. from 1 Jul 2015 to 30 Jun 2016 the CGT was 10% for sale within 1 year and 5% for sale within 1-2 year and 0% for sale after 2 years. Now CGT is 10% for sale within 1-5 years and 0% after 5 years.
Question is? What is CGT? Lets look into the definition of CGT first
"A capital gains tax (CGT) is a tax on capital gains, the profit realized on the sale of a non-inventory asset that was purchased at a cost amount that was lower than the amount realized on the sale".
So, CGT is paid on the increase in amount at selling compared to buying.
Question is? Before 1 Jul 2016 how CGT is computed? CGT was computed based on the difference to DC value at the buying and selling time. For example, you bought a 10Marla plot in year 2014 at 50 lac [DC values: 30 lac] and within 1 year you sold your plot at 60 lac [DC value: 35 lac]. So you have to pay 10% of the differential i.e. 5 lac which is 50,000 rupees!
So, CGT definition will remain same as it was before, now the only difference is the percentage
Khawaja Qasim® replied on Friday, July 1, 2016 05:08 AM 

Question is? Is 10% CGT too much? As it was 10% before as well for sale within 1 year?
Not really, 10% CGT is not that high and it will not create any panic. You have to pay 10% on the gains which means you can keep 90% of the gains. Not really, you have to pay 1% withholding but you can claim it back!
Question is? Why there is so much debate and panic?
I believe, it is not the CGT, nor stamp duty nor CVT. The issue will be DC rate Vs Market rate.
Salman.A® replied on Friday, July 1, 2016 05:14 AM 

@ khawaja Qasim


CGT was calculated at 10% gains (DC VALUE ) or 2% of DC value which ever is higher.

The case which you presented makes CGT @ 70,000 which is 2% of dc Value as that being higher.

People are panicked because of value of the property
ALI123 replied on Friday, July 1, 2016 05:15 AM 

If the whole market value is taxed at 10% irrespective of whether one has gained or incurred loss, no one would ever buy property in Pakistan.

I don't think this can be the case. And under the very unlikely scenario that it is, you can't call it CGT!
Khawaja Qasim® replied on Friday, July 1, 2016 05:19 AM 

Question is? What is DC rate and What is Market rate?
DC or deputy commissioner rates are used for valuation of land by LDA (in Lahore). Market rate is don't know? Or Market rate is the rate listed at LRE website :)
Question is? What impact Market rate will create instead of DC rate?
Huge impact! Why? because Market rate is 2-2.5 times of DC rate. You have to pay 2% CVT, 3% Stamp duty, 1% Advance income tax on purhcase. For example, your land purchase DC value is 30 lac you have to pay 6% of DC value in taxes + Transfer fee + Membership Fee + Membership Form+ Dealer's commission. If you have to pay 6% on Market value, then it is a lot of money!
Khawaja Qasim® replied on Friday, July 1, 2016 05:36 AM 

Question is? Mr. Salman.A raised very important point 10% or 2% what is this?
CGT was calculated at 10% gains or 2% of DC value whichever is higher. Yes, I was wrong tax should be 70,000 rupees! Why? beacuse 2% of 30 lac is more than 10% of 5 lac [New DC value:35 lac - Old DC value:30 lac]
In keeping with same principle now on, CGT is calculated now at 10% gains or 2% of Market value (not DC value) whichever is higher! At present, I only know its 10% gains lets assume same rule 2% but now on Market value!
Question is? What is the impact of 2% of Market value (as this case is usually higher) ?
You plot has a Market value of 1 crore. When you sell it, you have to pay CGT of 2 lac and 1 lac withholding tax. Impact on seller, yes but not much!
Khawaja Qasim® replied on Friday, July 1, 2016 05:46 AM 

Question is? Who will be the most sufferers with this tax?
Buyers! from my point of view, if they have to pay 6% tax on Market rate + Transfer fee + Membership Fee + Membership Form+ Dealer's commission then the amount is roughly 8-9% of buying prices. Means 9 lac rupees on 1 crore plot
Question is? Is there any hope? Any win win situation?
If buyers pay taxes on DC rate (as it is set by provincial government) and seller pay CGT on Market rate (2% of Market Value or 10% Gain, whichever is higher) then its win win situation. No one get harm much!
That's my understanding!
Khawaja Qasim® replied on Friday, July 1, 2016 06:06 AM 

Question is? By the way, why you said 10% CGT or 2% Market value is not that high? its too much
People already pay 10% withholding on National Saving Schemes, bonds, stocks and shares etc. The reason they didn't protest because if they get profit of 7 lac on Certificates they don't mind paying 70,000 withholding
Question is? What will be the impact of these taxes on property prices in short, medium and long term!
I will reply soon!
Khawaja Qasim® replied on Friday, July 1, 2016 06:29 AM 

Question is? You said most sufferers will be new buyers and who else?
New buyers have to pay lot of taxes either on Market rate or increased DC rate [News is that DC rates will be abolished]. So, they will suffer.
Sellers on the other hand have to pay 10% CGT or 2% Market value, whichever is higher. In my previous example as Mr. Salman.A pointed out 2% Market value comes higher. But I believe
"In short run 10% CGT will be lot higher and in long run 2% Market value will be higher"
Properties bought at low price [DC rate at that time] now properties have increased manifold [present Market value]. So, 10% CGT i.e. 10% of [Present Market value - Buying DC rate] will be lot higher than 2% Market value.
For example, if buying DC rate of 1 kanal plot was 50 lac 5 years back and selling Market price now is 200 lac then CGT is 15 lac. Which seems a lot because in government books you gained 150 lacs! Which in actual is not true because you bought property at Market rate not DC rate 5 years ago!
So, in short run 10% CGT will be lot higher seller suffer if they sell within 5 years. In long run, seller buy properties at market rate and sell at market rate. So, 2% of Market value will be most likely!
Shah® replied on Friday, July 1, 2016 06:29 AM 

Question is? Is CGT applicable on the differential of buying price and the selling price? Or is it applicable on the market value of property?
Answer is: Logically it should be on the differential of buying and the selling price. However according to all media reports received so far, it is levied on the market value of property.

Question is? CGT levied on DC Rate of property or market value of property?
Answer is Its levied on Market Value of Property

Question is? What does all this mean for a common person holding one or more plots in a housing society like DHA (from Phase 1-8)
Answer is: He will be completely screwed. Because market value of kanal plots in above locations is 2 crore and above. So at the time of sale his CGT alone will be 20 lac and above PLUS the advance tax PLUS CVT and Stamp Duty and membership fees.

Question is? What if govt decides to follow logic and levy CGT only on differential of buying price and the selling price?
Answer is: One will still be screwed because all properties bought till yesterday were declared at DC Value as the buying price in general. So a plot in DHA Phase 1-8 if bought till yesterday was declared to be bought at DC Rate (approx. 70-80 lac) and will be recorded at market value at the time of sale. So the differential will be huge (Current Market Value - DC Rate of last years = Amount on which CGT will be applicable)

Question is? Oooh...looks like we're all screwed.... What do we do now?
Answer is: Elect the same breed of idiots time after time and enjoy the benefits of idiocracy instead of democracy ;D
MIT® replied on Friday, July 1, 2016 02:24 PM 

Ageed with Mr. Shah. Current rulers are the most selfish and cruel in their greed & lust. Can only say that ..."Hore Chooopo" to voting for such idiots.
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