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CAPITAL GAIN TAX ON BUILT HOUSE,

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   Atta
Saturday, June 2, 2018 06:20 AM 
Reply: >
I buy a plot. I build a house on it. I sell the house within 1 year of buying the plot. How is the capital gain tax calculated on my sale?
uk invester replied on Saturday, June 2, 2018 11:23 AM 

CGT is calculated on net profit. So it depends on what you declare the purchase price of plot plus the cost of building the house and then your declared selling price. So let us say you declare the purchase price as 1 crore and then spent 1.25 on building the house, so your total cost is 2.25 and you sell it for 2.75 so net profit is 50 laks. You have to pay tax on 50 laks (for eg 10%)
Atta replied on Saturday, June 2, 2018 12:23 PM 

Thanks UK Invester. Where do I declare the construction cost,...in my filed tax returns? If yes, then this begs the question, how do non-filers pay CGT?
UK invester replied on Monday, June 4, 2018 03:57 AM 

My answer was based on the assumption that you are a filer, so yes you declare it in your tax returns. (Where exactly in the return, I dont know, probably in wealth statement where you declare the value of the house). However if you are non filer then offcourse you dont pay any tax, CGT included and get a free ride. This is the case presently for 99% of the population of Pakistan who are non filers.
Habib replied on Monday, June 4, 2018 07:34 AM 

At this Time there is Fixed Gain Tax on Plot Sold, when Seller is Non Filer. In DHA Phase 9 , 5 Marla Plot it was 12,000 as of April, and Was Paid By seller. I Think it is based on Current and Old DC Value difference and 10% of that difference.
The things are pretty simple and Nominal but Phobia is Huge, The sole reason is Complication in Laws, Like for CVT and Stamp duty Law says DC Value or Actually Paid amount whichever is more. In Market 100% Transections are done on DC rate which is usually 35% of Real value and no one objects to it.
If we go for maximum punishment a Judge can go to any Extent, That why Full Amount was Not paid, Why property was declared below Value, why Actual amount was canceled. These charges may amount to many years jail. I never Heard any one got Punishment in such cases. Yes for political reasons one can get Maximum.
Nabeel® replied on Monday, June 4, 2018 09:24 AM 

My understanding:

It's wrong to say non-filer does not pay CGT. Non-filer pays the 2% advance tax on sale which is non-adjustable, which is part of the CGT, while filer pays 1% advance tax but this is adjustable later while paying the overall CGT.

For filer, once you have made your house, you will show it as asset increase in wealth statement, and you will reduce your cash amount in bank. If you haven't shown it as asset increase, then when you sell it FBR may ask source of the sale proceeds.
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