KARACHI, December 3, 2024 – The Federal Board of Revenue (FBR) has announced updated advance tax rates on the sale or transfer of immovable property in Pakistan for the tax year 2025. These changes, outlined under Section 236C of the Income Tax Ordinance, 2001, aim to streamline tax compliance and ensure clarity for property transactions.
The FBR specifies that under Sub-section (1) of Section 236C, any entity responsible for registering, recording, or attesting property transfers is required to collect advance tax from the seller or transferor at the rates prescribed in Division X of Part IV of the First Schedule. These entities include local authorities, housing societies, real estate projects, joint ventures, and private registrars.
Exemptions Defined by the FBR
Certain categories are exempt from this provision, including dependents of Pakistan Armed Forces martyrs, individuals who die in service of the armed forces or government, and war-wounded personnel. The FBR clarified that this exemption applies to the first sale of immovable property allotted by the government or a recognized authority, in acknowledgment of services rendered by the aforementioned individuals.
For non-resident Pakistanis holding a Pakistan Origin Card (POC), National Identity Card for Overseas Pakistanis (NICOP), or a CNIC, who acquired property via a Foreign Currency Value Account (FCVA) or NRP Rupee Value Account (NRVA), the tax collected on such transactions will serve as the final discharge of tax liability for capital gains.
Adjustability and Minimum Tax
The FBR stated that the advance tax collected is adjustable, except when the property is both acquired and disposed of within the same tax year. In such cases, it will be treated as a minimum tax. Moreover, under Sub-section (2A), property transfers cannot be registered unless the seller provides evidence of discharging tax liabilities under Section 7E.
Revised Tax Rates by the FBR
• Transactions ≤ Rs. 50 million: ATL 3%, Late Filers 6%, Non-ATL 10%.
• Rs. 50–100 million: ATL 3.5%, Late Filers 7%, Non-ATL 10%.
• > Rs. 100 million: ATL 4%, Late Filers 8%, Non-ATL 10%.
These measures by the FBR aim to bolster transparency and revenue collection in Pakistan’s real estate sector.
