The President of Pakistan has circulated the Income Tax (Amendment) Ordinance, 2016 to further amend the provisions regarding valuation of immovable properties under the Income Tax Ordinance 2001 (the Ordinance).
Main features of the Amendment Ordinance are as follows:
Before, the fair market value of the immovable property was determined by reference to the basis of a valuation determination made by a panel of approved valuation personnel from the State Bank of Pakistan. With the amendment, the Federal Board of Revenue now has the authority to determine the fair market value of immovable property. In general, the fair market value will be the value fixed by the District Officer (Revenue) or other person authorized for purposes of the stamp duty.
The amended rules also concern withholding tax. Consequently, the period of limitations has been reduced from five years to three years. Also, the tax is not withheld on the first sale or transfer of immovable property acquired or allotted under certain circumstances.
Changes have been also made to the holding period threshold- gain realized on the disposal of immovable property is exempt from capital gains taxation if held for five years (increased from the previously applicable two-year period).
