Karachi, January 27, 2025 – The Federal Board of Revenue (FBR) has announced updated withholding tax rates for property transactions applicable during the tax year 2025.
These changes aim to streamline tax collection on real estate transactions and encourage compliance among taxpayers.
The FBR issued the revised tax rates under Sections 236C and 236K of the Income Tax Ordinance, 2001. Section 236C applies to the sale of immovable property, while Section 236K pertains to the purchase of such assets. The updated rates emphasize the distinction between active taxpayers, late filers, and those not on the Active Taxpayers List (ATL).
Updated Tax Rates for Sale of Property (Section 236C)
The FBR has categorized transactions based on the value of the property:
• For properties valued at or below Rs. 50 million, active taxpayers will pay 3%, late filers 6%, and those not on the ATL 10%.
• Properties valued between Rs. 50 million and Rs. 100 million will attract a 3.5% tax rate for active taxpayers, 7% for late filers, and 10% for non-ATL individuals.
• For properties exceeding Rs. 100 million, the rates increase to 4% for ATL individuals, 8% for late filers, and 10% for non-ATL parties.
Advance Tax on Purchase of Property (Section 236K)
Similarly, the FBR has revised the advance tax rates for property purchases based on fair market value:
• Properties valued at or below Rs. 50 million will incur 3% for ATL taxpayers, 6% for late filers, and 13% for non-ATL individuals.
• For properties worth between Rs. 50 million and Rs. 100 million, the rates are set at 3.5%, 7%, and 16% respectively.
• Transactions involving properties exceeding Rs. 100 million will be taxed at 4% for ATL taxpayers, 8% for late filers, and 20% for non-ATL parties.
The FBR’s revisions reflect its commitment to enhancing revenue collection while incentivizing individuals to maintain active taxpayer status. By imposing higher rates on non-ATL individuals and late filers, the FBR aims to promote compliance and discourage tax evasion.
These adjustments are expected to have a significant impact on the real estate sector. Taxpayers are advised to review the FBR’s latest withholding tax card and ensure compliance with the updated regulations for seamless property transactions in 2025.