Imposition of CGT on immovable property: TRCG meeting to discuss policy measures today

SOHAIL SARFRAZ

ISLAMABAD: An important meeting of the Tax Reform Co-ordination Group (TRCG) of the Federal Board of Revenue (FBR) will be convened at FBR House here on Friday (Dec 23) to discuss policy measures for the imposition of the capital gains tax (CGT) on immovable property following 18th Amendment.

Sources told Business Recorder here on Thursday TRCG of the FBR would discuss the issue of Capital Gain Tax (CGT) on immovable property in its next meeting to be convened on December 23, 2011. The 7th meeting of the TRGC would be convened at the FBR Headquarters to discuss key tax policy issues including CGT on immovable property following 18th Amendment.

Sources said that the exclusion of the 'immovable property' from the section 37 (Capital Gains) of the Income Tax Ordinance 2001 could empower the FBR to collect capital gain tax on property transactions without legal implications. Presently, immovable property is exempted from capital gain tax under section 37 of the Ordinance 2001.

Sources said that the Parliament has the authority to legislate for empowering the federal government for collection of the capital gain tax (CGT) on immovable property after 18th Constitutional Amendment. The CGT could be imposed on the immovable property after 18th Amendment.

Thus, Parliament can authorize the federal government to collect CGT on immovable property through legislation.

The TRCG would also finalize the redrafting of the SRO 1012(I)/2011. The stakeholders are expected to give their input on the redrafted statutory regulatory order (SRO) on revised zero-rated regime.

The tax managers would give an update on the FBR's performance in fiscal 2011-12 including revenue collection, broadening the tax base and results of enforcement/administrative measures to improve collection in the remaining period of current fiscal year.

The meeting will also discuss the issue of stamps on cigarette packs to help identify smuggled/non-excise paid cigarettes packs.  The TRCG will also discuss the issues of Centralized Audit, FBR's collection and reorganization of the FBR.

The TRCG would also discuss measures for expanding the outreach and tax policy proposals of the TRCG members, sources added.

The TRCG is expected to give its comments on the proposed lottery scheme to encourage documentation. Initially, the scheme would be restricted to the sales tax invoices of hotels and restaurants. In case of approval, the pilot project would be launched in Islamabad.