CGT up to 15% slapped on real estate

ISLAMABAD: The federal government has increased capital gains tax (CGT) up to 15% on the disposal of real estate within one year of purchase.

The government announced the 2022/2023 budget on June 10, 2022 and announced various tax measures to increase revenue.

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Through the Finance Bill 2022, changes were made to Section 37 of the Income Tax Ordinance 2001.

By the amendment, subsection 1A of Article 37 has been replaced, which is as follows:

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“(1A) Notwithstanding anything in subsection (1), the gain arising from the disposal of immovable property situated in Pakistan, to a person during a taxable year shall be taxable as capital gains capital at the rates specified in Section VIII of Part I of the First Schedule.

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The rates provided for in Division VIII of Part I of the First Schedule are:

S. No Holding period Tax rate Tax rate Tax rate
Open plots Built property Apartments
(1) (2) (3) (4) (5)
1. When the holding period does not exceed one year 15% 15% 15%
2. When the holding period is more than one year but not more than two years 12.5% ten% 7.5%
3. When the holding period is more than two years but not more than three years ten% 7.5% 0
4. When the holding period is more than three years but not more than four years 7.5% 5%
5. When the holding period is more than four years but does not exceed five years 5% 0
6. When the holding period is more than five years but does not exceed six years 2.5%
seven. When the holding period exceeds six years 0%

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