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CAPITAL VALUE TAX

The Capital Value Tax is levied under section 7 of the Finance Act, 1989, which after amendments by Finance Acts, 1990 and 1992, reads as follows:---

7. Levy of tax on Capital Value of certain assets.-- (1) A tax on the capital value of assets, to be called the capital value tax, shall be payable by every individual,
association of persons, firm or a company which acquires by gift, exchange, surrender or relinquishment of rights by the owner (whether effected orally or by deed or obtained through Court decree) except by inheritance, or gift from spouse, parents, grand parents, a brother and a sister an asset or a right to the use thereof for more than twenty years, or purchase *of an air ticket such as is specified in sub-section (2), at the xxxxx.

Explanation.--- For the purposes of this section, the expressions---

(a) "association of persons" and "firm" shall have the same meaning as contained in the Income Tax Ordinance, 1979 (XXXI of 1979); and

(b) "company" shall have the same meaning as defined in the Income Tax Ordinance, 1979 (XXXI of 1979);*

(c) "development authority" means an authority formed by or under any law for the purposes of development of an area and includes any authority, society, agency, trust, association or institution declared as development authority by the Central Board of Revenue by a notification in the official Gazette; and

(d) "registration authority" means the person responsible for registering or attesting the transfer of the asset or of the right to use thereof for more than twenty years, and in the case of a development authority or a co-operative society, its principal officer.

(2) The assets and the rates referred to in sub-section (1) are:

Description of asset Rate of CVT percentage of the capital value

(A) Immovable property (other than residential plots of land with land area upto 240 square yard and flats and apartments with covered area less than 1500 sq. feet) situated in---

(a) urban area i.e. area falling within the limits of metropolitan corporation, municipal corporation, municipal committee, town committee, cantonment board or the Islamabad Capital Territory; 2.5%
(b) areas between the outer limits of urban areas and the following:--- 2.5%
(i) in case of Karachi upto 40 Kilometers from the municipal or cantonment limits;
(ii) in case of Lahore, upto 30 Kilometers from the municipal or cantonment limits;
(iii) in other cases upto 10 Kilometers from the existing limits of municipal bodies or cantonment boards;
(B) Agricultural land with value of Rs. 200,000 and above, situated in areas other than those specified in paragraph (A) above; 2.5%
(C) Motor vehicles:
xxxxxx

(II) Capital Value Tax shall be payable on purchase of xxx motor vehicles, not previously used in Pakistan, at the following rates:

Motor vehicle of an engine capacity:
(i) not exceeding 800 cubic centimetres and three wheelers. Nil
(ii) exceeding 800 cubic centimetres but not exceeding 1000 cubic centimetres 3.75%
(iii) exceeding 1000 cubic centimetres but not exceeding 1300 cubic centimetres 5%
(iv) exceeding 1300 cubic centimetres but not exceeding 1600 cubic centimetres; and 6.25%
(v) exceeding 1600 cubic centimetres 7.5%]
D air ticket for foreign travel commencing from an airport in Pakistan except in the case of--- 1.5% of the value of the ticket
(i) Diplomats; and
(ii) Aircraft crew on duty.

(3) For the purposes of sub-section (1), the capital value of the asset shall be---

(a)   in the case of immovable property, the value as specified in the standard valuation Tables of Immovable Properties or the value specified by the District Collector for the purposes of Stamp Duty or, where such value has not been determined, the value declared by the transferee:

Provided that in case the property is let out, its value shall be adopted at ten times the sum for which it might reasonably be expected to be let out from year to year;

(b) in the case of a motor vehicle not plying for hire, which is---

(i) imported the landed cost as determined by the Customs authorities;
(ii) purchased from a manufacturer in Pakistan. the price paid by the purchaser;
(iii) others as declared by the transferee [.]
xxxxxx

(4) The capital value tax shall be collected by the person responsible for registering or attesting the transfer of the asset in respect of which the tax is payable, at the time of registering or attesting the transfer [:]

Provided that in the case of motor vehicle xxx when purchased from a manufacturer in Pakistan, the capital value tax shall be collected by such manufacturer before making the delivery of the said vehicle [:]

Provided further that the collector of customs shall in the case of every motor vehicle imported into Pakistan, at the time of customs clearance, collect capital value tax on the basis of the value of such vehicles as increased by the customs duty, sales tax, income tax and any other charges payable before removal from customs area, if any, levied thereon, at the rates specified in clause II of paragraph C of sub-section (2).

5 The amount of capital value tax paid by an individual, association of persons, firm or a company, borne on National Tax Number Register of the Wealth Tax Departments shall be adjustable towards the wealth tax payable by such NTN holder for the assessment year corresponding to the financial year ending on the thirtieth day of June in which tax was paid and the two immediately succeeding assessment years, if any.

[ ]

(6) The proceeds of the tax collected under sub-section (4) shall be credited to the Federal Consolidated Fund under the head specified by the Federal Government.

(7) Where the capital value tax is not collected from the person liable to pay it, the tax may be collected by an officer designated by the Central Board of Revenue in this behalf from the said person, and the provisions of section 32 of the Wealth Tax Act (XV of 1963), shall, so far as may be, apply to the collection of the capital value tax as they apply to the collection of tax under the said Act.

(8) Where any person fails to collect or having collected fails to pay
xxx the capital value tax as required, he shall be personally liable to pay the tax alongwith additional tax at the rate of 15% per annum for the period for which such tax or part thereof remains unpaid.

(8A) The Commissioner of Wealth Tax, on an application by the assessee, may revise any order made under this section.

(9) The Central Board of Revenue may, by notification in the official Gazette, make provisions relating to the collection and recovery of, any other matter relating to the capital value tax.

10 The Federal Government may, by notification in the official Gazette, exempt, any person or class of persons or asset or class of assets from the Capital Value Tax xxx;

Provided that such exemption may be subject to such conditions as may be specified in the notification.


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