Advance tax exempted on sale of immovable properties on holding period of above five years

Advance tax exempted on sale of immovable properties on holding period of above five years

KARACHI: The Federal Board of Revenue (FBR) has exempted the advance tax on sale of immovable property subject to the property is held for above five years.

The officials of Federal Board of Revenue (FBR) said that advance tax under Sub-Section (1) of Section 236C of Income Tax Ordinance, 2001 would not be collected if the immovable property is held for a period exceeding five years.

Under Sub Section 1 of Section 236C of the Income Tax Ordinance, 2001, Any person responsible for registering, recording or attesting transfer of any immovable property shall at the time of registering, recording or attesting the transfer shall collect from the seller or transferor advance tax at the rate specified in Division X of Part IV of the First Schedule:

Explanation,—For removal of doubt, it is clarified that the person responsible for registering, recording or attesting transfer includes person responsible for registering, recording or attesting transfer for local authority, housing authority, housing society, co-operative society and registrar of properties.

Provided that this sub-section shall not apply to a seller, being the dependant of a Shaheed belonging to Pakistan Armed Forces or a person who dies while in the service of the Pakistan Armed Forces or the service of Federal or Provincial Government, in respect of first sale of immovable property acquired from or allotted by the Federal Government or Provincial Government or any authority duly certified by the official allotment authority, and the property acquired or allotted is in recognition of or for services rendered by the Shaheed or the person who dies in service.

(2) The Advance tax collected under sub-section (1) shall be adjustable

Provided that where immovable property referred to in sub-section (1) is acquired and disposed of within the same tax year, the tax collected under this section shall be minimum tax.

According to the ordinance the advance tax rate on sale of immovable properties is one percent of the gross amount of the consideration received. However, the tax rate shall be two percent if a person is not appearing on the Active Taxpayers List.

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