Federal Board of Revenue (FBR) has issued withholding tax rates on sale and purchase of immovable properties during the year 2022-2023.
The FBR issued withholding tax card for 2022-2023 after incorporating changes brought through Finance Act, 2022 to the Income Tax Ordinance, 2001.
Tax authorities collect withholding tax on sale of immovable property under Section 236C and on purchase of immovable property under Section 236K of Income Tax Ordinance, 2001.
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Following are the withholding tax rates on immovable property transactions and text of relevant sections under Income Tax Ordinance, 2001:
WITHHOLIDNG TAX RATE ON SALE OF IMMOVABLE PROPERTY:
The withholding tax rate is 2 per cent of gross amount of consideration received on sale of immovable property by persons who are on the Active Taxpayers List (ATL) under Section 236 C of Income Tax Ordinance, 2001. However, the rate shall be enhanced by 100 per cent to 4 per cent for persons not on the ATL.
Section 236C. Advance Tax on sale or transfer of immovable Property
(1) Any person responsible for registering, recording or attesting transfer of any immovable property shall at the time of registering, recording or attesting the transfer shall collect from the seller or transferor advance tax at the rate specified in Division X of Part IV of the First Schedule:
Explanation,—For removal of doubt, it is clarified that the person responsible for registering, recording or attesting transfer includes person responsible for registering, recording or attesting transfer for local authority, housing authority, housing society, co-operative society, public and private real estate projects registered/governed under any law, joint ventures, private commercial concerns and registrar of properties.
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Provided that this sub-section shall not apply to a seller, being the dependant of a Shaheed belonging to Pakistan Armed Forces or a person who dies while in the service of the Pakistan Armed Forces or the service of Federal or Provincial Government, in respect of first sale of immovable property acquired from or allotted by the Federal Government or Provincial Government or any authority duly certified by the official allotment authority, and the property acquired or allotted is in recognition of or for services rendered by the Shaheed or the person who dies in service:
Provided further that if the seller or transferor is a non-resident individual holding Pakistan Origin Card (POC) or National ID Card for Overseas Pakistanis (NICOP) or Computerized National ID Card (CNIC) who had acquired the said immovable property through a Foreign Currency Value Account (FCVA) or NRP Rupee Value Account (NRVA) maintained with authorized banks in Pakistan under the foreign exchange regulations issued by the State Bank of Pakistan, the tax collected under this section from such persons shall be final discharge of tax liability in lieu of capital gains taxable under section 37 earned by the seller or transferor from the property so disposed of.
(2) The Advance tax collected under sub-section (1) shall be adjustable
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Provided that where immovable property referred to in sub-section (1) is acquired and disposed of within the same tax year, the tax collected under this section shall be minimum tax.
(4) Sub-section (1) shall not apply to:—
(a) a seller, if the seller is dependent of:
(i) a seller, if the seller is dependent of:
a Shaheed belonging to Pakistan Armed Forces; or
(ii) a person who dies while in the service of the Pakistan Armed Forces or the Federal and Provincial Governments; and
(b) to the first sale of immovable property which has been acquired or allotted as an original allottee, duly certified by the official allotment authority.
WITHHOLDING TAX RATE ON PURCHASE OF IMMOVABLE PROPERTY:
The withholding tax rate on purchase of immovable property is two per cent on persons on the ATL under Section 236K of the Income Tax Ordinance, 2001. However, this rate shall be increased by 250 per cent to 7 per cent for persons not on the ATL.
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Section 236K. Advance tax on purchase or transfer of immovable property
(1) Any person responsible for registering, recording or attesting transfer of any immovable property shall at the time of registering, recording or attesting the transfer shall collect from the purchaser or transferee advance tax at the rate specified in Division XVIII of Part IV of the First Schedule.
Explanation,—For removal of doubt, it is clarified that the person responsible for registering, recording or attesting transfer includes person responsible for registering, recording or attesting transfer for local authority, housing authority, housing society, co-operative society, public and private real estate projects registered/governed under any law, joint ventures, private commercial concerns and registrar of properties.
(2) The advance tax collected under sub-section (1) shall be adjustable:
Provided that if the buyer or transferee is a non-resident individual holding a Pakistan Origin Card (POC) or National ID Card for Overseas Pakistanis (NICOP) or Computerized National ID Card (CNIC) who has acquired the said immovable property through a Foreign Currency Value Account (FCVA) or NRP Rupee Value Account (NRVA) maintained with authorized banks in Pakistan under the foreign exchange regulations issued by the State Bank of Pakistan, the tax collected under this section from such persons shall be final discharge of tax liability for such buyer or transferee.
(3) Any person responsible for collecting payments in installments for purchase or allotment of any immovable property where the transfer is to be effected after making payment of all installments, shall at the time of collecting installments collect from the allotee or transferee advance tax at the rate specified in Division XVIII of Part IV of the First Schedule:
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Provided that where tax has been collected along with installments, no further tax under this section shall be collected at the time of transfer of property in the name of buyer from whom tax has been collected in installments which is equal to the amount payable in this section.
(4) Nothing contained in this section shall apply to a scheme introduced by the Federal Government, or Provincial Government or an Authority established under a Federal or Provincial law for expatriate Pakistanis:
Provided that the mode of payment by the expatriate Pakistanis in the said scheme or schemes shall be in the foreign exchange remitted from outside Pakistan through normal banking channels.
