Karachi, December 2, 2023 – The Federal Board of Revenue (FBR) has collected a staggering Rs 155 billion in withholding tax on the sales and purchases of immovable properties during the Fiscal Year 2022-2023.
This remarkable figure marks a colossal increase of 192.75 percent compared to the Rs 53 billion collected in the previous fiscal year 2021-2022, as reported by FBR officials to PkRevenue.com.
The notable surge in the collection of withholding tax from property transactions has been attributed to a significant policy change. FBR officials highlighted that the substantial increase is a direct result of a 100 percent rise in the tax rate for the tax year 2023. This change, introduced through the Finance Act, 2022, saw the withholding tax rates under Section 236C and Section 236K of the Income Tax Ordinance, 2001, for both sellers and purchasers of immovable properties, being elevated from one percent to 2 percent.
Under Section 236C, the FBR collects withholding tax at a rate of 2 percent from the seller of immovable property. Simultaneously, under Section 236K, withholding tax at the same rate is collected from the purchaser of immovable properties. This policy adjustment has evidently played a pivotal role in the substantial increase in revenue collection.
The FBR officials disclosed that a total of Rs 70.33 billion was collected as withholding tax on the sale of immovable properties during the fiscal year 2022-2023. This represents an extraordinary growth of over 340 percent compared to the Rs 15.97 billion collected in the previous year. This significant surge underscores the resilience and adaptability of the real estate market to the revised tax framework.
On the other hand, withholding tax on the purchase of immovable properties also witnessed a substantial increase. The FBR collected Rs 84.74 billion during the fiscal year 2022-2023, compared to the previous year’s Rs 37 billion, reflecting a notable growth of 32.4 percent. This rise in revenue from property transactions signals a robust market, despite the adjusted tax rates.
The FBR, through its withholding tax mechanism, continues to play a critical role in revenue generation for the government. The increased tax rates have not only bolstered the fiscal resources but also serve as a mechanism to regulate and document property transactions, contributing to the broader goals of economic transparency and accountability.
As the fiscal year concludes, the FBR’s achievement in collecting Rs 155 billion in withholding tax on immovable properties reflects a successful implementation of fiscal policies aimed at strengthening the country’s revenue base. The real estate market’s response to these changes underscores its resilience and adaptability in the face of evolving economic landscapes.
