Question 1

How is Capital Gains Tax (CGT) calculated on a property transfer in Islamabad?

Accepted Answer

Capital Gains Tax (CGT) on the transfer of immovable property in Islamabad Capital Territory is levied under the Income Tax Ordinance 2001. The gain is computed as the consideration received minus the cost of acquisition. The applicable tax rate depends on the holding period: property held for less than one year is taxed at 15%, one to two years at 12.5%, two to three years at 10%, three to four years at 7.5%, four to five years at 5%, and five to six years at 2.5%. Property held for more than six years is exempt from CGT under current law. FBR-notified DC rates serve as the minimum valuation basis where actual consideration is lower.

Question 2

What stamp duty applies on a property sale deed in Islamabad Capital Territory?

Accepted Answer

Stamp duty on a property sale deed in Islamabad Capital Territory is charged under the Stamp Act 1899 as adapted for ICT. The standard rate is 3% of the property value for the buyer. Additional charges include a Capital Development Authority (CDA) transfer fee and the 1% Gains Tax withheld at source under Section 236C of the Income Tax Ordinance 2001. The CDA transfer fee rate varies by property category (residential, commercial, or industrial) and is notified by CDA. The total transfer cost therefore includes stamp duty, CDA fees, and the Section 236C withholding.

Question 3

Who collects sales tax on services in Islamabad Capital Territory?

Accepted Answer

Sales tax on services in Islamabad Capital Territory is collected by the Federal Board of Revenue (FBR) under the Islamabad Capital Territory (Tax on Services) Ordinance 2001. Unlike the four provinces, which have their own revenue authorities (Punjab Revenue Authority, Sindh Revenue Board, KP Revenue Authority, and Balochistan Revenue Authority), ICT falls within federal jurisdiction. The standard rate is 16%, with reduced rates applying to certain specified services. Service providers operating in ICT must register with FBR and file monthly sales tax returns.

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