Tax on inherited property proposed

ISLAMABAD: The Federal Board of Revenue (FBR) of Pakistan proposed imposing capital gains tax on the sale of inherited properties.

The proposal was floated by FBR officials in a meeting of the National Assembly’s Standing Committee on Finance, chaired by committee chairman Syed Naveed Qamar.

The FBR authorities briefed the participants that the value of the inherited property will be assumed to be the market value on the day of the owner’s death.

The inherited property transferred through a family settlement will get legal protection, and the actual value will be assumed from the day of the father’s death.

Explaining the mechanism, FBR officials said that if a plot was worth Rs. 8 million at the time of the owner’s death and later sold for Rs. 10 million, capital gains tax would be charged on the Rs. 2 million, the amount increases in value.

However, committee chairman Syed Naveed Qamar advised that the property’s original value should be calculated from the date ownership is formally transferred.

The committee subsequently suggested determining the real value from the date of the transfer of ownership.

The standing committee also approved a proposal requiring income tax returns to be filed exclusively through electronic means.

The FBR officials said taxpayers would be required to submit income tax returns electronically through the IRIS system, and companies would also have to file their financial statements in machine-readable formats.

The officials also noted that the FBR has largely shifted to digital filing since 2013, although manual returns were still being submitted from certain cities, including Gujranwala, but now the proposal aims to make electronic filing mandatory.