Taxes play an important role in the country’s economy. If people don’t pay their taxes, the economy cripples down and development hampers. Paying taxes can contribute to the economy as it helps to rotate the wheel of economy smoothly in society from the rich to the poor. It is the responsibility of every citizen to pay and file their taxes, according to law as well as Islam.
If we really want our country to thrive and flourish, we must also contribute to this cause. After the passage of the 18th Amendment in 2010, in NFC award, tax collection is the provincial subject and therefore it is the responsibility of every province to collect taxes from their respective cities. Property taxes differ by city. If you are looking for a very comfortable and livable place, Rawalpindi and Islamabad should be on your list.
The mainstream of Pakistanis does not pay taxes. This in turn cripples down our economy and financial situation. Governments do not get enough money to pay for infrastructure, health care, education, and security. Also, due to the lack of taxes, the government has to look for external sources of funds to generate funds. These external sources put sanctions on country and bring structural adjustment programs which further deteriorates the conditions of poor people. Therefore, taxes play a very important role in bringing up the economic prosperity in any country and tread its way towards development.
Taxes are generally levied by the Government departments and are on different products. If someone wants to calculate a tax on their house/property, then you first need to have information about the plot size and how to know them precisely.
What is a Property Tax?
Property tax is a specific amount that landowners must pay to the government. These taxes are collected to help the government financially. Your taxes are used to pay salaries, build infrastructure, buy goods, and more and helps the government to run its state machinery.
Also, property taxes aren’t just for homes. Property includes all types of tangible assets that you own. This includes all land in your name, homes, office buildings, farms, etc.
No doubt, today, building your home can be very expensive and difficult. With material costs, labor, and taxation, the overall prices are skyrocketed. In Pakistan there are many banks that are providing loans for home building. When someone purchases a property in Pakistan, the tax is usually 25%.
In today’s turbulent times it is important to take care of your finances. Don’t let your money sit in a corner. There are many small investment business ideas in Pakistan. Invest your hard-earned cash in various investment opportunities in Pakistan and make profit with your money. There is no doubt that investment is important for financial stability.
Types of Property Taxes:
- Capital Value Tax (CVT)
As per the Finance Act 2006, the person who purchases any property will have to pay Capital Tax Value. This tax is 2% of the total amount. The amount is paid to the government at the time of buying the property.
- Capital Gains Tax (CGT)
The Capital Gain Tax is similar to Capital Value Tax. It is the tax amount that is paid to the government by the seller at the time of selling the property. The tax is levied to the property of the sellers. The tax amount fluctuates everywhere. After three years of selling the property, the seller has to pay the Capital gains tax. For the first-year, the tax amount is 10%, the second year it comes down to 7.5%, and in the third year, it’s 5% only.
- Withholding Tax
The withholding tax includes both Capital Gain Tax and Capital Value Tax. This tax amount is paid by both the buyer and the seller. Withholding tax is paid at the time of selling the property. Depending on the tax rate, both parties must pay withholding tax.
- If the property is registered to pay income tax by the purchaser, the tax remains 2%, but if the purchaser is not a taxpayer, the tax he rises to 45%.
- A huge increase ensures that homebuyers become taxpayers and should pay their taxes on time. The same goes for sellers.
- If he is a Filer, he must pay 1% of the tax, but if he is a Non-Filer, he will be charged withholding tax of up to 25% which would be called withholding tax.