Karachi, July 23, 2024 – The Sindh Revenue Board (SRB) has notified new sales tax rates for services related to immovable property for the tax year 2024-25.
The adjustments come as a result of amendments made through the provincial Finance Act, 2024, aiming to streamline the tax structure and increase compliance.
The updated sales tax rates for services related to immovable property are as follows:
1. Purchase or Sale or Hire of Immovable Property:
o Standard rate: 15%
o Reduced rate: 10% (However, input tax credit/adjustment is not admissible)
2. Services Provided by Property Dealers:
o Standard rate: 15%
o Reduced rate: 10% (However, input tax credit/adjustment is not admissible)
3. Renting of Immovable Property Services:
o Standard rate: 15%
o Reduced rate: 3% (However, input tax credit/adjustment is not admissible)
A significant exemption has been made for renting of immovable property services provided to individuals whose income does not exceed the maximum amount that is not chargeable to tax under the Income Tax Ordinance, 2001. This measure is designed to provide relief to low-income individuals and ensure that the tax burden is equitably distributed.
The SRB’s move to update the sales tax rates is seen as an effort to enhance revenue collection while also providing certain reliefs to specific segments. By allowing reduced rates without the admissibility of input tax credit, the board aims to simplify the tax process and reduce the scope for tax evasion.
These changes are expected to have a significant impact on the real estate sector in Sindh. Property dealers and individuals involved in the purchase, sale, or renting of immovable property will need to adjust their financial planning and accounting practices to comply with the new rates.
Tax experts suggest that while the updated rates may initially pose a challenge for compliance, they will ultimately lead to a more transparent and efficient tax system. The SRB is likely to issue further guidelines and clarifications to assist taxpayers in understanding and implementing these changes.
The provincial government’s focus on revising tax rates reflects its broader strategy to enhance fiscal stability and ensure sustainable development. As the new tax year unfolds, stakeholders in the real estate market will be closely monitoring the impact of these changes on their operations and profitability.