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Frequently asked question
CAPITAL VALUE TAX.
Here are some of the Frequently Asked Questions in respect of Capital Value Tax.
1. What is Capital Value Tax?
2. What are the Assets liable to Capital Value Tax?
3. What are the Rates of Capital Value Tax?
4. How to determine the Capital Value of Assets?
5. Who should collect Capital Value Tax?
6. How to adjust Capital Value Tax against Wealth Tax?
The Capital Value Tax is levied under section 7 of the Finance Act, 1989. It is payable by every individual, AOP, firm or company who acquires or purchases an asset or a right to use thereof for more than 20 years or purchases air ticket for foreign travel.
2. What are the Assets liable to Capital Value Tax?
(a) Motor vehicles of engine capacity not exceeding 800cc, not previously used in Pakistan.
(b) Air Ticket for foreign travel.
3. What are the Rates of Capital Value Tax?
I. Motor Vehicle
Engine Capacity
Rate of CVT percentage of the Capital Value
not exceeding 800cc
Nil
exceeding 800cc but less than 1000cc
3.75%
exceeding 1000cc but less than 1300cc
5.00%
exceeding 1300cc but less than 1600cc
6.25%
exceeding 1600cc
7.50%
II. AIR TICKET
Air ticket for foreign travel commencing from an airport in Pakistan
1.5% of the value of the ticket
Exemption in case of Air ticket is available to
(i) Diplomats; and
(ii) Aircraft crew on duty.
4. How to determine the Capital Value of Assets?
For calculating CVT, the capital value of motor vehicles not plying for hire shall be
imported
Landed cost as determined by Customs Authorities Landed cost includes all charges payable prior to the removal of the vehicle from the custom area. The charges are
i. C & F value
ii. Insurance
iii. Landing charges
iv. Import permit fee
v. Custom duty, import surcharge and iqra surcharge
vi. Sales tax, and
vii. Income Tax
purchased from manufacturer in Pakistan.
The price paid by purchaser.
others
As declared by transferee.
5. Who should collect Capital Value Tax?
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 .
In the case of motor vehicle purchased from a manufacturer in Pakistan, the Capital Value Tax shall be collected by such manufacturer before making the delivery of the said vehicle.
6. How to adjust of Capital Value Tax against Wealth Tax ?
The amount of capital value tax paid by an individual, association of persons, firm or a company, having National Tax Number shall be adjustable against 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.
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