In This Post:
– How to Calculate CVT in Punjab
– How to Calculate Stamp Duty in Punjab
Update (May 21, 2020): In order to incentivise the real estate sector during the coronavirus outbreak, the Punjab government not only deferred property taxes from urban immovable property but also reduced the CVT and stamp duty taxes to 2 percent on any property transactions.
In recent bid to increase the tax net in Pakistan, the government is increasingly putting in efforts to have maximum taxes. A valuation table determines the value of the property on which tax will be levied. Some property owners try to show less value of their properties just to evade property taxes. To fix this loophole in the system, a new property valuation table has been formulated with prices increasing up to 20 percent. The Capital Value Tax (CVT) and Stamp Duty in Punjab on real estate are taxes collected at the provincial level. This blog will be looking at what these taxes mean when selling or buying property in Punjab.
What is CVT and Stamp Duty?
Taxes are calculated on a property’s deputy commissioner (DC) value. The more expensive an area is, the higher its DC rate will be. Consequently, the amount of tax to be paid will also be higher.
Want to know what is CVT and Stamp Duty? Let us discuss it in detail.
Capital Value Tax
Those looking to buy property need to bear in mind that they have to pay quite a few taxes before reaching the purchase decision. Capital Value Tax (CVT) is to be paid by the buyer at the time of buying property. According to Finance Act, 2006, the Capital Value Tax or CVT is levied at the rate of 2% of the recorded value. Property, either transferred as a gift or an exchange, comes under Capital Value Tax. If the transfer happens between parents, siblings or spouse – CVT is excluded in such cases.
CVT in Punjab
According to Budget 2018-19, government has suggested abolishing DC rates. Recommendations have also been made to reduce CVT and Stamp Duty in Punjab down to only 1%. Neither of these recommendations have been implemented by the provinces so far. So, currently the total of CVT and Stamp Duty in Punjab for urban property still stands at a total of 5% (2% CVT and 3% Stamp Duty). There are different kinds of tax on purchase of property in Pakistan. Stamp Duty is basically a tax paid on the legal document at the time of purchasing property. Under the Stamp Act 1899, Stamp Duty is levied at 3% of the DC rates of the property.
How much CVT do you need to pay in Punjab?
This tax was levied on property buyers in Punjab in 2011. Property buyers also pay the CVT for both residential and commercial property of all sizes in urban areas, while rural areas are exempt from CVT.
The budget for the current fiscal year did not impact CVT, and the percentage applicable on immovable property did not change.
As per this budget, you pay CVT in Punjab at 2% of the property’s value. However, you must know that the DC rates of property all over the country were revised last year just when the Federal Board of Revenue shared valuation tables for 21 major cities across the country. This was done to reduce the disparity between the market value and the rates on which property taxes are collected.
Calculating CVT
The percentage of CVT applicable on property tax filers and non-filers is the same. Since the jurisdiction of this tax is provincial, it is also calculated on DC rates. Here is an example:
The new DC rate of a 1-kanal residential plot in Defence Housing Authority (DHA) Lahore Phase IX is PKR 5,400,000 , the CVT applicable on this plot is 2% of PKR 5,400,000 i.e. PKR 108,000. As per the old DC rates, the CVT on these plots would have been PKR 60,000.
Stamp Duty
The rate of stamp duty in Punjab is 3% of the property’s DC value. Under the E-Stamp System, which was implemented in all districts of the province in December 2016, the Bank of Punjab collects this tax before issuing an e stamp duty. Collecting stamp duty is a major source of revenue for the government of Punjab. There wasn’t much facilitation provided to the citizens. Punjab Information Technology Board’s E Stamping system has resulted in complete changes in issuing stamp paper. It used to take a couple of days to purchase stamp paper. But it has now been put online by PITB so that anyone looking to purchase stamp papers can do so by just visiting the PITB government’s website.
Stamp Duty in Punjab is applicable on all types and sizes of property, in both urban and rural areas. This duty is also paid by property buyers, and the percentage is the same for tax filers and non-filers.
Calculating Stamp Duty
While purchasing a 1-kanal residential plot in DHA Lahore Phase IX, you will be required to pay 3% of the property’s DC rate i.e. 3% of PKR 5,400,000 will be PKR 162,000.
The Stamp Duty rates on these plots (on old DC rates) was previously PKR 90,000. These are the latest stamp duty rates in Punjab Pakistan 2019.
Comparing pre and post 2016 value
By increasing property’s DC rate, the CVT collected by the provinces is 20% higher than the amount collected previously (on old DC rates). This is the same in the case of Stamp Duty, when it comes to Punjab. If you are looking for more updates regarding income taxes in Pakistan, then read our blog: All about tax brackets in Pakistan for 2019. For more updates on property, stay tuned to the best real estate blog in Pakistan.
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thx for sharing such useful information.
i have a question that in March 2014 i bought a 07 Marla plot in a society and paid all the taxes i was asked for. now the society send me notice to pay more than 50 thousand PKR in addition to capital value tax with description that its due at my side since 2014 and could not be collected at the time of sale.
i want to know is it admissible on me and at what ratio i have to pay the capital value tax. i think if it is admissible than i shall paid it to dc rate of that time. looking for positive response. thx
This sounds strange. Please talk to a lawyer. They cannot ask you to pay taxes 3 three years after you purchased the plot.
i want to buy a house through bank by house financing scheme ,now my question is registration fee will charged me on market rates or on Dc rates ? if it is charged on Dc rates than it will be written in records and bank will not pay me more amount than written amount …i am confused pls reply positively
How is registered deed of a flat in four storey building is assessed for registration of sale deed purposes in Gulberg, Lahore?
TMA Tax for register still applicable after 5% Stamp + CVT..
TMA for Registery still applicable , if already 5% CVT + Stamp is there
Can you please confirm that how much rate would be applied in taxila (Punjab) in order to have rental agreement? 5.25% OR 3.25% of Annual average rent. The agreement would be made for 5 years only.
What rate are you asking about, exactly?
I have registered my registry in registrar office sialkot and then GLR was issued by MEO Gujranwala on my name. Now i want to surrender Or cancel my registry / lease deed of my house in sialkot cantonment. Therefore please tell its procedure and now what will be charges or taxes in case of carrying out surrender deed or cancellation of registry / lease.
Regards
Madam Samra Zulfiqar waiting for answer
Dear Madam,
Is it necessary to register in FBR as seller/buyer of plots to pay taxes if I need to sale & purchase plots. What are the rules to sale/purchase of plots.
Much appreciate if helped.
Regards.
You don’t need to be filer to sell property but to buy any property valuing greater than PKR 5 million, you will have to be a filer from now.
Madam Samra awaiting for answer
Hi Ms. Samra, Thank you so much for such valuable information sharing. It’s highly appreciated.
I have a query, Is there any expiry date for STAMP DUTY & CVT?
Is it correct that the stamp duty expires after three months & once expire the buyer has to pay it again? or hire a lawyer to extend the date?
Thanks
No, that’s not correct. You pay these taxes once you purchase property and no renewal is required after that.
I bought a plot and get it registered by sharing with my wife means two registries to avoid CVT less than 4million slab but registrar office saying that you are using illegal way to avoid cvt they are saying you have to pay penalty is it correct that we can get this benefit?
I bought a plot and get it registered by sharing with my wife means two registries to avoid CVT less than 4million slab but registrar office saying that you are using illegal way to avoid cvt they are saying you have to pay penalty is it correct that we can get this benefit?
Thanks Samra for such useful insight on this complicated matter.
I have a question and i will highly appreciate if you reply
I want to transfer a Plot to My Son as a gift. I am not sure what taxes are applicable in this case and whats the exact procedure. The plot is located in private society in Islamabad for which the NOC is issued by CDA, Islamabad. Is stamp duty applicable on gift transfer in Islamabad or Punjab?
Thnks in advance
What is the current rate of Adhesive Stamp on IB documents in Punjab? (Rs:100/- or rs:200/- per IB document usually use in banks)
dear sir salam, nice to see your page. i would like to ask a question. thay how much tax of registry is payable to BOR rawalpindi in rs for a plot bought in topcity near new islamabad int airport. the cost of land was six lac when i bought the plot in 2008 then dev chg were 5 lac and then utulity chg were 3 lac . now the topcity owners say that possion will be given after depositting registry fee and hand over the chalan to th office of topcity / if answered through . will be better sir’ abdurrauf876@gmail.com. thank u sir
i got a noticed from P.I.A HOUSING SOCIETY when i purchased my plot since 2012 the stamp duty and CVT were faked and pay again with fine of 15% per annum, when i visit my society office they are saying at that time when you purchased plot your CVT and stamp duty were not submitted i was shocked if this is not submitted than how would a got my transfer letter ? please tell me what to do now ? one more question i got property tax noticed by tax department i have a 1 kanal plot where i lived and they sent me 7 lac and than corrected it and sent me again 37k but previous year i paid 10k why these currupt peoples are on our head ? please tell me what to do ?
find a lawyer, pursue the case through him, make him speak to the concerned people.
If a house is already regitered in my name since april 2016 accordingto rates at that time(when there was no e stamp) will i have to pay additional duty at time of selling it now?