There are following are potential changes to CGT propsed in 2021 bill
1- where a person purchases and sells immovable property in the ordinary course of business ( investors/ or within 2 years), such gains shall be taxable as business income and not as capital gain. This will have huge impact if approved as CG tax will be signicantly increased for big fishes in such instances.Good for country though!
2- currently CGT is 2.5% to 10% per slab u/s 37 while bill proposed 5% uniform rate, so CGT won’t reduced to 2.5% anymore even after longer holding. Moreover, where gain is more than 5 million, tax to be charged under normal Tax regime which will be for more than Capital Gain Regime and again will have huge impact if approved. Above changes will increase tax revenue and level the uncontrolled price hike hopefully within in year hopefully.
- Noor asked 3 years ago
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Dear Noor,
Yes, it seems that following has been proposed , we shall wait till budget is approved befor e we give our opinion in the matter and ofcourse if it is implemented we may see real estate suffering a set back. Howver I do not see nay major correction.
Jazak Allah
- Capt Shahnawaz answered 3 years ago
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Under normal tax regime, CGT can be upto 35% and if we include provisional taxes with that, Captical Gain Tax could be upto 50%. The tax under normal regime is proposed for any gain above 5 million.
Will be interesting to see it’s approval in next week or two. Big dropped in transction might be seen after few months after approval of budget as people take times to fully understand implication why many will take risk to overlook/choose tax evasion hoping they won’t ever have trouble. but it will make unfavourable market for empty plot invester
- sajjad answered 3 years ago
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Sajjad sb, your interpretation is incorrect. The CGT proposal says that profits of 0 to 50 lac will be taxed at flat 5% but if profits on buying/selling property is more than 50 lac, then normal CGT regime applies. Normal CGT regime is the one being currently implemented with five tax slabs.
It won’t be a major hit to real estate but builders will be very upset so I don’t think Senate will approve. Noor sb, your interpretation is also slightly incorrect so read what I said above.
- QasimBukhari answered 3 years ago
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