ISLAMABAD: The Federal Board of Revenue (FBR) has made a new tax plan for property deals under the ongoing fiscal year that makes sellers pay much higher withholding tax than buyers, reports have asserted.
Property sellers are now obliged to pay a minimum of 4.5 percent withholding tax, whereas for properties worth more than Rs100 million, the rate is boosted to 5.5%.
For non-filers, the burden is much greater, with an 11.5% withholding tax on sales of property above Rs100 million.
On the buyer’s front, the new rates are relatively lower. Filers buying property up to Rs50 million are being taxed at a 2.5% withholding tax, and properties valued at more than Rs100 million now have a 6.5% tax attached.
While non-filers have much higher rates, between 10.5% and up to a maximum of 18.5% based on the value of the property.
The step is the change in FBR’s strategy, shifting greater tax duty onto the seller of property, especially those who are outside the tax rolls. The strategy seeks to raise compliance with tax as well as boost collection from the booming real estate market.
The withholding taxes are still being collected by the Revenue Department on the transfer of property ownership, with the amount transferred to the FBR later.
The new tax regime is a demonstration of how the government is continually trying to widen the tax base and deter illegal property transactions.
