Islamabad: The Federal Board of Revenue (FBR) issued a circular on Tuesday explaining all revisions brought into the Income Tax Ordinance, 2001 through Finance Bill, 2019.
According to the circular, prior to Finance Bill, 2019, the capital gains tax (CGT) on immovable properties was levied separately on the basis of holding period of a property. The CGT was 10% if the holding period was up to one year, 7.5% if it was equal to or more than one year but less than two years, and 5% if the holding period was equal to or more than two years but less than three years. No CGT was levied if the period exceeded three years.
In the Finance Bill, 2019, the holding period for taxation of CGT for a plot has been increased to eight years; while for constructed property, it is four years. Total gain will be taxable if the holding period of a property does not exceed one year. However, if the period exceeds one year but does not exceed eight years in the case of open and four years in the case of constructed property, 75% of the gain will be taxable.
The revision is elaborated in the following manner: