Islamabad, September 5, 2024 – The Federal Board of Revenue (FBR) on Thursday announced new rules for the collection of Federal Excise Duty (FED) on property transactions. The updated regulations were formalized through SRO No. 1376(I)/2024, amending the Federal Excise Rules, 2005, and introducing a new chapter titled “Excise Duty on Property.”
Under the new rules, developers and builders are mandated to collect FED at different rates based on the buyer’s tax status and compliance. The rules stipulate that:
1. 3% Duty: Applicable if the buyer is listed on the active taxpayer list maintained under Section 181A of the Ordinance at the time of property acquisition.
2. 5% Duty: Applicable if the buyer has not filed an income tax return by the due date, as specified in Rule IA of the Tenth Schedule of the Ordinance.
3. 7% Duty: Applicable if the buyer is not listed on the active taxpayer list at the time of acquisition.
The collected FED must be credited to the Federal Government on the same day via a computerized payment receipt (CPR) or SWAPS payment receipt (SPR). Additionally, developers or builders are required to submit a monthly statement to the Commissioner using Form ‘B’.
If the duty is not paid or is short-paid by the developer or builder, the Officer Inland Revenue responsible for the developer or builder will take necessary actions to collect the unpaid or short-paid amount under Section 14 of the Act. A default surcharge, as specified in Section 8 of the Federal Excise Act, will also be levied for the period from when the duty was due until it is paid.
However, if it is established that the duty, which was supposed to be collected by the developer or builder, has been paid by the buyer, no recovery will be made from the developer or builder. In such cases, the developer or builder will be liable to pay only the default surcharge, calculated from the date the duty was due to the date it was actually paid.
The introduction of these rules aims to streamline the collection of FED on property transactions and ensure compliance among developers and builders. The FBR’s move is expected to enhance revenue collection and enforce stricter adherence to tax regulations within the real estate sector.
