The Federal Board of Revenue (FBR) has imposed an advance tax on all investments of all real estate projects. The taxes are made applicable from 31st October 2022.
The investors evidently have many questions regarding this new policy. This article will cover most of these questions and will help you understand how the FBR Advance Tax Policy will be applicable to your investment.
As the term ” Advance Tax” may seem a dreary one, but it’s not! Advance Tax is not a tax being charged separately on real estate properties. The advance tax you’re required to pay now would be later adjusted to your annual income tax.
Table of Contents
Which Investment will pay FBR Advance Tax?
- Either you buy or sell a property, you’ll have to pay an FBR Advance Tax.
- Tax will also be applicable to the Installments files that have been balloted.
- The files that are not balloted shall not pay the tax yet (but only after the files are balloted).
These amounts are subject to change without notice as per any amendments in law, in the percentage of taxes for filers, non-filers, or in the FBR value of properties.
How much FBR Tax do I have to pay?
You can calculate how much tax amount is due on your investment/s without much ado if you read the instructions below carefully.
Before moving on, you need to know the following three things!
FBR Taxation Rate
FBR has set a taxation rate of Rs. 167,000 per marla
FBR Categories of Investments
FBR has categorized all types of investments such as sale, purchase, or payment of installments into the following three categories :
- Filer
- Non Filer
- Overseas or Non Resident
FBR’s Advance Tax Rate for each category
Each category shall pay a specified percentage of the plot/property price as FBR Advance Tax, as in the table below:
| Category | Purchase Tax | Payment of Installments Tax | Sale Tax |
|---|---|---|---|
| Filers and Non-residents | 2% | 2% | 2% |
| Non-filers | 7% | 7% | 4% |
How to calculate the Advance Tax on your property?
- Identify the category in which your investment falls, i.e. Filer, Non-filer or Overseas.
- Determine the tax rate or percentage applicable to your investment, according to your category i.e. Filer or Non-filer. (Note: Selling and buying would have different tax percentages. See the table above)
- Find your Property’s Value: Multiply the taxation rate which is Rs. 167,000 with the No. of Marlas of your property/plot.
Property Value = 167,000 * No of marlas - Calculate the Advance tax: Multiply that tax percentage by the property’s value.
Advance Tax = Percentage * (167,000 x No. of Marlas). - The result you get is the FBR Advance Tax that you have to pay.
The complete formula to calculate the FBR Advance Tax is mentioned below:
FBR Advance Tax = Rs. 167,000 x No. of Marlas x Tax Percentage
Example:
To further understand it, let’s take an example of the 5 Marla Non-Filer plot you’re going to buy. Note that the Purchase Tax Rate will be applicable to you, so the tax percentage will be 7%.
FBR Tax on 5 Marla Non-Filer = 167,000 x 5 x 7% = Rs. 58,450
The result you get is Rs. 58,450 which is the tax due on your property if you buy it.
FBR Advance Tax on Capital Smart City Investments
The taxes will also be applicable to the investments in Capital Smart City under the New FBR Taxation policy. The management of CSC is held responsible for collecting this tax from all members and deposit it with FBR on their members’ behalf.
In this regard, advance tax amount is due from the members of CSC at the following rates:
| Category | Purchase Tax | Payment of Installments Tax | Sale Tax |
|---|---|---|---|
| Filers and Overseas or Non-residents | 2% | 2% | 2% |
| Non-filers | 7% | 7% | 4% |
These rates shall be applied on plot values determined by the FBR and not on booking price. The tax amount will be adjusted with any future payments that members make.
The Taxes will be applicable on installments of Balloted Files only!
FBR Advance Taxes for CSC Smart Villas
| Type | Size | Filer Tax | Non Filer Tax | Non Resident/ Overseas |
|---|---|---|---|---|
| Villa | 5 Marla | 16,700 | 58,450 | 16,700 |
| Villa | 7 Marla | 23,380 | 81,830 | 23,380 |
| Villa | 10 Marla | 33,400 | 116,900 | 33,400 |
| Villa | 12 Marla | 40,080 | 140,280 | 40,080 |
| Villa | 1 Kanal | 66,800 | 233,800 | 66,800 |
| Villa | 2 Kanal | 133,600 | 467,600 | 133,600 |
RELATED: Capital Smart City Increased The Prices For Smart Villas
FBR Advance Taxes for Residential Plots
| Type | Size | Filer Tax | Non Filer Tax | Non Resident/ Overseas |
|---|---|---|---|---|
| Residential | 3.5 Marla | 11,690 | 40,915 | 11,690 |
| Residential | 7 Marla | 23,380 | 81,830 | 23,380 |
| Residential | 10 Marla | 33,400 | 116,900 | 33,400 |
| Residential | 12 Marla | 40,080 | 140,280 | 40,080 |
| Residential | 1 Kanal | 66,800 | 233,800 | 66,800 |
| Residential | 2 Kanal | 133,600 | 467,600 | 133,600 |
| Residential | 3 Kanal | 200,400 | 701,400 | 200,400 |
| Residential | 4 Kanal | 267,200 | 935,200 | 267,200 |
| Residential | 5 Kanal | 334,000 | 1,169,000 | 334,000 |
| Residential | 8 Kanal | 534,400 | 1,870,400 | 534,400 |
Lately, there have been more than a few cases of price fluctuation in different real estate projects. This was anticipated in blog post by the experts at iReal Projects that the real estate market is likely to have its ups and downs in near future owing to the current political situation in the country.
READ: EFFECTS OF POLITICAL INSTABILITY ON REAL ESTATE MARKET
FAQs related to Advance Tax in Capital Smart City
When do I have to pay the Advance Tax?
For balloted files: Advance Tax will be collected by Capital Smart City in your next payment and submitted to FBR.
My income is below income tax threshold, why do I have to pay advance tax?
Advance Tax is a withholding tax. When you file your income tax return, you can get this amount adjusted towards tax payment. If your income tax is zero or less than advance tax paid, you can claim it back in your return.
Is the tax only applicable on balloted files?
The Advance Tax is applicable on balloted files. For non-balloted files, Advance Tax has to be paid after they are balloted.
What is the taxation rate for Villas?
The taxation rate and tax percentage are same for plots and villas.
For further queries, you may contact us at +92 334 5557734 or send us a WhatsApp Text!
