FBR has inserted a new clause (114AA) in Part I of the second schedule to the ordinance. As per this clause, the exemption has been provided on the capital gain on the sale of constructed residential property (in case of a house, having a land area of 500 square yards and in case of flat, area up to 4000 square yards), that was being used for personal accommodation by the resident individual, his spouse or his dependents, and the utility bills for that property were being issued in the name of said individual.
The exemption shall not be available to such a person who has previously availed the exemption.
However, Section 236C of the ordinance remains un-amended, the section implies that sale of the above-mentioned properties would be subject to the advance tax collection of 1% of the sale proceeds, unless, an exemption certificate from commissioner has been obtained by the seller.
As per the current provisions, the capital gain tax is zero on the sale of those constructed properties whose holding period is more than 4 years. Also, in the case when such property is sold within one year of the holding period, advance tax collected under Section 236C at the rate of 1% is being treated as minimum tax.
This amendment is purposed to providing an exemption of capital gain tax to those constructed properties whose holding period is less than 4 years,