Buyers of goods and properties sold through public auctions or tenders will be required to pay advance tax under Section 236A of the Income Tax Ordinance, 2001.

The Federal Board of Revenue (FBR) will collect advance tax on the sale of goods and properties through public auctions and tenders during Tax Year 2027.

According to the Income Tax Ordinance, 2001, updated up to June 30, 2026, the tax will apply to buyers purchasing goods or properties through public auctions or tenders between July 1, 2026 and June 30, 2027.

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Section 236A of the Income Tax Ordinance requires any person conducting a public auction or auction through a tender to collect advance tax from the successful bidder. The tax will be calculated on the sale price of the goods or property at the rate specified in Division VIII of Part IV of the First Schedule.

The provision covers goods and properties belonging to the government, local governments, public authorities, companies, foreign contractors, consultants, consortia and other entities. It also applies to confiscated or attached goods and properties, regardless of their ownership.

The FBR has clarified that the term sale through public auction or tender also includes the renewal of a licence previously awarded through an auction or tender.

Furthermore, where the payment for auctioned goods or property is received in instalments, the advance tax must be collected with each instalment rather than entirely at the time of the initial transaction.

Under Section 236A, buyers can claim credit for the advance tax collected against their income tax liability for the relevant tax year, subject to Section 147 of the ordinance and applicable provisions.

The law also treats the awarding of a lease as a sale of property for this purpose. This includes leases granting the right to collect tolls, fees and other levies.

However, Section 236A(3) provides that advance tax collected on leases involving the right to collect tolls will constitute final tax.

The provisions form part of the FBR’s advance tax collection framework for Tax Year 2027.

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