Punjab government reduced the stamp duty on the purchase of property.
The Governor introduced it through an ordinance.
According to the ordinance, the stamp duty is reduced from 5% to 1% on the purchase/transfer of the property.
keep in mind though,
- This ordinance will be in effect until June 30th, 2020.
- It will only cover Urban areas of Punjab.
Stamp Duty Reduced For Urban Areas Only
Urban area means the rating area as per the property tax act of 1958, the metropolitan and the municipal area, any area developed by the developers, housing colonies, housing societies, etc.
You may be surprised to see the stamp duty as 5%.
But it’s nothing unusual.
Basically, 5% stamp duty includes 2% Capital value tax but as per the finance act of 2017, the wording has been merged.
So, they write it as stamp duty on the documents.
I hope you get the point.
So guys, it’s a limited chance to make an investment and pay less on registry taxes.
For example, If you buy a property worth of Rs 1,000,000.
Normally, you pay 5% i.e Rs 50,000.
And 1% Town Tax or TMA fee i.e Rs 10,000.
So in total you pay Rs 60,000 in the province to register your document.
Under the ordinance, you will only pay Rs 10,000 as a stamp duty.
So your total will be Rs 20,000 instead of Rs 60,000.
It’s a discount of Rs 40,000.
Please know that you will pay 1% Withhold tax to FBR also.
But this tax is adjustable i.e you get it back when you file your tax return.
In short, its a half hearted effort by the government to boost up construction and real estate sector.
But still, it has some benefits and you should try to avail it.
As for the real change in the structure, the government should permanently fix this tax to be 2%.
On the other hand, under the table dealings in the shape of “Iqraar nama” should be discouraged.
What’s your opinion about the reduction in the duty?