Income Tax Ordinance 2001: advance tax on sale, purchase of immovable properties

KARACHI: Adjustable advance tax is applicable for filers and non-filers of income tax return on sales and purchase of immovable properties to be collected at the time of transaction.

According to updated Income Tax Ordinance, 2001 issued by Federal Board of Revenue (FBR) the tax shall be collected under Section 236C and Section 236K of the Ordinance, which are as follow:

Section 236C: Advance Tax on sale or transfer of immovable Property

Sub-Section (1): 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:

“The rate of tax to be collected under section 236C shall be 1% of the gross amount of the consideration received for filers and 2% of the gross amount of the consideration received for non-filers.”

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.

Sub-Section (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.

Sub-Section (3): Advance tax under sub-section (1) shall not be collected if the immovable property is held for a period exceeding three years.

Section 236K: Advance tax on purchase or transfer of immovable property

Sub-Section (1): 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 purchaser or transferee advance tax at the rate specified in Division XVIII of Part IV of the First Schedule.

The rate of tax to be collected under section 236K shall be:-

S. No Period Rate of Tax
01 Where value of immovable property is up to Rs4 million Zero percent
02 Where the value of immovable property is more than Rs4 million Filer 2 percent
Non-filer 4 percent

 

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.

Sub-Section (2): The advance tax collected under sub-section (1) shall be adjustable.

Sub-Section (3): Any person responsible for collecting payments in installments for purchase or allotment of any immovable property where the transfer is to be effected after making payment of all installments, shall at the time of collecting installments collect from the allotee or transferee advance tax at the rate specified in Division XVIII of Part IV of the First Schedule.

Sub-Section (4): Nothing contained in this section shall apply to a scheme introduced by the Federal Government, or Provincial Government or an Authority established under a Federal or Provincial law for expatriate Pakistanis:

“Provided that the mode of payment by the expatriate Pakistanis in the said scheme or schemes shall be in the foreign exchange remitted from outside Pakistan through normal banking channels.”

 

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