ISLAMABAD (June 05 2008): The government is likely to withdraw 'time-bound exemptions,' substantially reduce income tax exemptions; raise withholding tax on cash withdrawal from banks from 0.2 percent to 0.3 percent and raise capital value tax (CVT) on immovable property from 2 percent to 5 percent in budget 2008-2009.
Sources told Business Recorder on Wednesday that the government is seriously examining these budget proposals which might be incorporated in the Finance Bill 2008-2009. According to sources, withholding tax @ 0.1 percent was levied in 2005 on cash withdrawals from the banks exceeding Rs 25,000.
The rate of withholding tax was enhanced from 0.1 percent to 0.2 percent of the amount withdrawn and limit of Rs 25,000 per transaction was changed to per day basis in 2006-2007. Now, the proposal is to enhance again the rate from 0.2 percent to 0.3 percent. Another proposal under consideration is to increase the rate of CVT from 2 to 5 percent applicable on immovable property.
Presently, immovable property (other than commercial property and residential flats) situated in urban area, measuring at least one kanal or 500 square yards whichever is less are liable to CVT. Where the value of immovable property is recorded, 2 percent of the recorded value would be collected as CVT and where the value of immovable property is not recorded, Rs 50 per square yard of the landed area would be charged.