Can any brother elaborate on withholding tax,and any other taxes which presently discouraging the investor to invest, almost investors are coming on cash instead to invest in property due to taxes. Plz explain why
Brothers
Withholding or retention tax in simple words is like you go to an ice cream shop and buy ice cream. The seller takes a small bite before giving you the rest of the ice cream. This is what withholding tax is.
Many forms of withholding taxes are reclaimable like Withholding tax on car token, utility bills, banking transactions etc. But in Pakistan extracting such amounts from the government is impossible. However, you can adjust them if you are aware of that.
As far as i know there is this 1% WHT on property's MV but exceeding 2 million atleast for filers and for non-filers is 2%. I don't know but maybe they are trying to increase it to 4% for non-filers heard somewhere.
Then there is this CGT which is applicable if you sell a property within 4 years of acquiring it. If you sell after 5 years then there is no CGT. I think if you sell in the 1st year its around 10% (previous rate was 7.5%), 2nd year 7.5% (previous rate was 5%), 3rd and 4th year 5%. Kindly confirm the rates yourself.
Then there is this Withholding tax on banking transactions, usually on withdrawals. Filers is 0.3% per transaction greater than Rs.50,000 and for non-filers is 0.6%.
Another big blunder known as Wealth tax not sure if it is introduced or not but if it does then Islamabad property ka to Allah hi Hafiz.
Withholding tax is advance tax which govt deducts from non-filers. If you are doing transactions worth millions you should be filling your income tax return and avoid WHT. But people in Pakistan don’t want economy to be documented. Nobody wants to be part of legal things and blaming illegal system in country… Strange people
Arshad Sb,
Thanks.. Some correction...
The 1% and 2% withholding tax is applicable on property above 3 millions and not 2 millions...
The CGT amount is applicable if the property is sold within two years and not four years..
Regards
Al Payal: People have no trust in Govt. And they are right to some extent since FBR is auditing only those people who are filing and not auditing the many corrupt fraudis who are not filing there income returns. Trust in this govt. Can only be developed if all classes in this country are treated equally.
Mr. Khan: Can the withholding tax on purchase of new car that is paid to the manufacturer, is reimbursable from FBR like other withholding taxes?
Al Payal: One of my reply is not approved for posting in this thread.
Only those people are being audited who are filing their returns. Outcome is that people will not trust this system until all classes in this country are treated equally.
Khan Sb thx for the correction.
Babur no that tax is not reimbursable. It is not paid to the manufacturer. It is your liability to the FBR but manufacturer can pay to FBR on your behalf.
This is the minimum tax you have to to pay no matter what.
This category of WHT i think is labelled under the WHT on goods and supplies.
Not all WHT are reimbursable. Only a few are
Irony of the matter is that overseas Pakistanis would have to pay the non-filer tax rate as they are not filer in Pakistan.
@Ahmad... You can file your income tax return using FBR E-portal.. Showing your actual income in Pakistan if you have any like rental or profit on accounts otherwise you can show zero income... Show your remittance in asset statement. Remittance is non-taxable.
I am an overseas Pakistan's and I am filer showing all my remittance and rental income in Pakistan...
Thanks Al Payal, I tried that in the past but for some reason failed to Enroll online. I ll give it a try again.
@Ahmad.. FBR is improving the system.. You should try now.. You can now also apply for NTN online. IF you have NTN than just do E-Enrollment and continue..
I have done my filing sitting outside Pakistan.. Once you got enroll its very easy to prepare income tax return and submit it each year...
You should have Pakistani SIM with you and register on your name.
Al payal
Will you please elaborate.
If i am overseas paki and want to file in fbr e portal. Should i mention all my property plots and bank balance?
And what evidences fbr to show that i am overseas pakistani.
Arshad, recent Withholding tax on bank transaction has no 50,000 limit and it is on all modes of transactions (cheque, draft, online, etc.). It is 0% (zero) for filers and 0.3% for non-filers. Traders' negotiations were almost successful with Ishaq Dar and possibility is that this will be reduced to 0.1% after 31st Oct.
There has been and still is 0.3% WH tax on over 50K cash withdrawals in a day for everyone (filers and non-filers).
Thx Isloo bhai for correction