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FBR takes back officers’ powers to amend assessment sans audit

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CGT rates on immovable properties increased from 2.5-10pc to 3.5-15pc

ISLAMABAD: The Federal Board of Revenue (FBR) has said that the rates of capital gain tax (CGT) on disposal of immovable properties within four years of purchase have been enhanced from 2.5-10 percent to 3.5-15 percent through the Finance Act, 2021.
The FBR in its explanation to changes made through Finance Act, 2021 in the Income Tax Ordinance, 2001, said that a separate block of taxation of capital gain on the sale of immovable property is available under the Ordinance.
The gain arising on the disposal of immovable property for more than 4 years is not taxable. The capital gain arising on the disposal of immovable properties is taxable to extent of 100 percent, 75 percent, 50 percent and 25 percent if property is sold within one, two, three and four years respectively.
The gain so calculated on the basis of holding period was taxable at the rates ranging from 2.5 percent to 10 percent. Now these rates have been slightly enhanced through changes in Division VIII of Part I of First schedule of the Ordinance; however, the holding period concession remains intact.
The rate of tax on capital gains on disposal of immovable property under sub-section (1A) of section 37 shall be as follows: where the gain does not exceed Rs5 million, 3.5 percent; where the gain exceeds Rs5 million but does not exceed Rs10 million, 7.5 percent: where the gain exceeds Rs10 million but does not exceed Rs15 million, 10 percent; and where the gain exceeds Rs15 million, 15 percent.
Meanwhile, the Federal Board of Revenue (FBR) has withdrawn the powers of Inland Revenue officers to conduct an inquiry for amending an assessment without selection of audit.
The FBR while explaining major amendments made in the Income Tax Ordinance, 2001, through the Finance Act, 2021 stated that tax authorities were authorised to conduct inquiry under section 122(5A) of the Income Tax Ordinance in certain matters regarding amendment of assessment without selection of case for audit under section 177 of the Ordinance.
“This power to conduct an inquiry has been withdrawn,” the FBR said. The law prescribes a time limit of five years for amendment of assessment. Such proceedings were usually dragged for long periods after issuance of show cause notices. Now the time limit of 120 days has been prescribed to conclude these proceedings after issuance of show cause notice. Necessary changes have been made in section 122(9) of the Ordinance.
The power of the commissioner to reject advance tax estimates has also been withdrawn. Necessary changes have been made in section 147 of the Ordinance. Law has not provided any time limitation to complete proceedings in pursuant to the orders of the commissioner under section 122A. Now proceedings shall be concluded within the time limit of 120 days. – TLTP