Government imposes a fixed tax of up to Rs. 1.5 million on residential plots

The federal government has recently implemented a capital value tax (CVT) on farmhouses and large residential properties in Islamabad, as per the latest amendments in the Finance Bill passed today.

Here are the key details of the new CVT rates:

1. Farmhouses:

• The CVT is now fixed based on the area of the farmhouses.
• For farmhouses with areas between 2,000 to 4,000 square yards, the CVT is set at Rs. 500,000.
• For larger farmhouses exceeding 4,000 square yards in area, the CVT increases to Rs. 1,000,000.

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1. Residential Houses:

• Similarly, CVT rates for residential houses are now fixed based on their area.
• Residential houses with areas between 1,000 to 2,000 square yards will incur a CVT of Rs. 1,000,000.
• For residential houses exceeding 2,000 square yards in area, the CVT rises to Rs. 1,500,000.

1. Other Specified Assets:

• The Finance Act, 2022 also provides for CVT rates on other specified assets, which will be determined by the Federal Government.
• These rates are capped at 5% of the asset’s value.

These amendments aim to generate revenue from high-value properties in Islamabad and are part of the government’s fiscal measures outlined in the Finance Act, 2022.