ISLAMABAD, Nov 2: The two per cent Capital Value Tax (CVT) being collected indiscriminately by the Central Board of Revenue (CBR) on mortgaging of property and granting of power of attorney is causing distress all around, particularly to senior citizens and widows.

Victims of the arbitrary policy point out that in no way a power of attorney involves financial transaction as it does not transfer propriety rights or change the title of property. It only facilitates handling of property.

Such an ill-advised policy only adds to the burdens of the already hard pressed common people, the victims say.

Though the government’s objective in levying tax on land would have been to generate revenue and to plug the loopholes big land investors benefit from, they argue that “the policy would also discourage the youth to fulfil their socio-religious- cultural obligations towards their old parents and those who cannot manage intricate property matters by themselves”.

A range of people interviewed by Dawn revealed that the two per cent CVT is being charged regardless of actual financial transaction taking place or not in land deals.

Then the tax is unjustifiably charged twice.

First the provincial revenue officials charge the two per cent CVT on all power of attorneys whether given to any blood relative or others, and the same is again charged at the time of sale or transaction of the property, those interviewed said.

They proposed that government should exempt the power of attorney from CVT affected by spouses, parents, grandparents, brothers, sisters, aged widows, uneducated womenfolk or others unable to manage their property matters in courts, or are prevented by social customs to do that.

People executing mortgages too are made to pay the same levy twice - first on relinquishing their propriety rights to obtain a loan and again at the time of clearing that loan to regain their mortgaged property.

It was proposed that the power of attorney awarded for obtaining a loan by mortgaging a property be exempted from the CVT, and also in cases where it was awarded for surrendering property to institutions cantonment/tehsil for public welfare, such as building schools, colleges, dispensaries, roads etc.

An aggrieved person narrated to Dawn his woes after his aged father gave him the task of looking after his land and other property matters.

“When I presented my power of attorney to the revenue authorities, they instructed me to pay approximately Rs170,000 per kanal as CVT charges,” he said, requesting anonymity.

He wondered if “the financial wizards who proposed this levy ever reflected on the socio-religious obligations of a citizen in an Islamic Welfare State which the country is claimed to be?”

Other anomalies pointed out in the CBR’s policy related to extending the definition of urban areas up to 10 kilometres from the outer limits of municipal bodies and cantonment boards.

Municipal bodies exist no longer and the definition would make villagers liable to pay CVT, without distinguishing between towns and villages.

It was observed that CVT on exchange of property is being charged in spite of the fact that difference of cost of land assessed by revenue authorities was already being collected as tax.