Acting under the agenda of Pakistan Raises Revenue Project (PRRP), the FBR is devising a new tax policy for real estate buyers and sellers in the upcoming budget (2023-2024). The proposal has been submitted to the government of Pakistan and is likely to be approved.
The new budget will impose an increased tax on the sale and purchase of property files. The FBR also plans to document the trading of plot files of private housing societies.
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Why is there a need for increased tax rates?
It is seen that the withholding taxes are not paid while trading of plot files of private housing societies. Moreover, the housing societies also do not show the actual transfer of files.
The upcoming FBR budget will provide guidelines for the documentation of buyers and sellers. The documentation will help ensure that each real estate buyer or seller pays tax.
Moreover, the registered real estate agents will also be targeted in this process as they execute the transfer of property files.
FBR is vigilantly taking measures to update the valuation tables of properties across the country.
To do so, FBR is consulting with provincial authorities such as senior members Board of Revenues, Sindh, Balochistan, Punjab, Khyber-Pakhtunkhwa, and Gilgit-Baltistan. Under instructions from provincial authorities, the divisional heads/district heads will nominate the representatives of the Board of Revenue who will consult with the teams constituted by the chief commissioners of Regional Tax Offices.
Let’s dig into the details of the FBR’s New Tax Policy for Real Estate Buyers & Sellers!!
Categories of Taxpayers
The taxpayers would be classified into two categories:
- Active Taxpayers
Active Taxpayers are those who have been paying taxes regularly. Active Taxpayers List will include their names.
- Non-Active Taxpayers
Non-Active Taxpayers are those real estate sellers or buyers who have not been paying taxes during the trading of files.
When will increased tax policy be imposed?
The increased tax values will be implemented from 1st July 2023.
How much tax rate will be increased?
The tax rate for plot files or real estate files will be increased from 100 percent to 250 percent of the rate specified in Division XVIII of Part IV of the First Schedule (mentioned in Section 236K).
The members who do not appear in the Active Taxpayers List will be essentially subjected to pay this tax.
The purpose of this new policy is to harmonize the valuation of immovable properties between FBR and the provincial governments/districts.