Karachi, December 30, 2023 – The tax rates on property transactions, encompassing both sale and purchase, have been officially announced for the tax year 2024 in Pakistan.
The updated tax rates mandate that individuals engaging in immovable property transactions are required to pay withholding tax at the time of the transaction.
The tax rates are differentiated for individuals listed in the Active Taxpayers List (ATL) and those not on the ATL. According to the official rate chart for the tax year 2024, the following withholding tax rates apply:
For Sellers of Immovable Property:
• Individuals in the ATL: Three percent of the consideration received.
• Individuals not in the ATL: Six percent of the consideration received.
For Buyers of Immovable Property:
• Individuals in the ATL: Three percent of the transaction amount.
• Individuals not in the ATL: 10.5 percent of the transaction amount.
This means that a seller of immovable property in Pakistan, if listed in the Active Taxpayers List, is obligated to pay a withholding tax of three percent of the consideration received. However, if the seller is not an active taxpayer, the withholding tax rate increases to six percent.
Similarly, a person purchasing immovable property in Pakistan, provided they are an active taxpayer, is subject to a three percent withholding tax. On the other hand, if the buyer is not on the Active Taxpayers List, the withholding tax rate is elevated to 10.5 percent of the transaction amount.
These tax measures aim to encourage tax compliance among property transactions and contribute to the documentation of the real estate sector. The distinction in tax rates based on taxpayer status underscores the government’s commitment to incentivize individuals to become active taxpayers.
Property owners, buyers, and sellers are advised to familiarize themselves with these updated tax rates to ensure compliance with the law. The government continues to focus on reforms that foster a transparent and accountable tax system, promoting economic growth and fiscal responsibility.
