KARACHI, September 17, 2024 – The Federal Board of Revenue (FBR) has released the updated withholding tax card for property sales for the tax year 2024-25, bringing clarity to tax obligations associated with the sale of immovable properties.
The updated tax card outlines the rates applicable to individuals based on their tax status, under Section 236C of the Income Tax Ordinance, 2001.
This step by the FBR is part of a broader effort to strengthen tax compliance, enhance transparency in real estate transactions, and ensure that individuals contributing to the national tax system receive favorable rates, while non-compliant individuals face higher tax burdens.
Applicable Tax Rates
According to the FBR’s withholding tax card, the rates for property sales differ based on whether the taxpayer is listed on the Active Taxpayers List (ATL), a late filer but still on the ATL, or not listed on the ATL. The distinction is designed to incentivize timely and accurate tax filing while imposing penalties on non-compliant individuals.
The tax rates are as follows:
1. For transactions where the gross amount of consideration does not exceed Rs 50 million:
o Persons listed on the ATL are required to pay 3% withholding tax.
o Late filers who have managed to be listed on the ATL will face a higher rate of 6%.
o Non-ATL persons are subjected to a significant 10% tax rate.
2. For transactions where the gross amount of consideration exceeds Rs 50 million but does not exceed Rs 100 million:
o ATL-listed individuals will pay a 3.5% withholding tax.
o Late filers who are on the ATL will be subject to a 7% rate.
o Non-ATL individuals will still face the maximum rate of 10%.
3. For transactions where the gross amount of consideration exceeds Rs 100 million:
o ATL-listed persons will pay 4% in withholding tax.
o Late filers on the ATL will be taxed at 8%.
o The rate for non-ATL individuals remains steady at 10%.
Withholding Tax and Compliance
The FBR collects withholding tax on the transfer of immovable properties under Section 236C of the Income Tax Ordinance, making this a crucial part of property transactions across Pakistan. These withholding tax rates, updated annually, reflect the government’s efforts to improve revenue collection, particularly from the booming real estate sector.
For taxpayers, this tax card serves as a guide to ensure compliance with the latest regulations and avoid the steep penalties imposed on non-ATL individuals. By maintaining their status on the ATL, taxpayers can benefit from significantly lower withholding tax rates, encouraging timely filing and participation in the national tax system.
This updated tax framework for property sales emphasizes the government’s focus on fostering compliance and transparency in Pakistan’s real estate market, ensuring that the sector contributes fairly to the national treasury.
