The Federal Board of Revenue (FBR) has made new amendments regarding sale and purchase of immovable properties in the Finance Bill, 2019, which was passed in the National Assembly of Pakistan on June 28, 2019.
These amendments have been made in Section 236C and 236K of Income Tax Ordinance, 2001, and are applicable from July 1, 2019.
As per the amendment made in Section 236C of the Income Tax Ordinance 2001, an advanced tax of 1% for filers and 2% for non-filers on sale or transfer of immovable properties is applicable. However, no such tax will be collected in case the property is held for more than five years.
Tax Paid under this section will be Minimum Tax, if immovable property is purchased and sold out within the same tax year.
Tax Paid under this section will be Adjustable Advance Income Tax under section 236C of the Income Tax Ordinance 2001, if immovable property is purchased and sold out after completion of one year from the date of purchase.
WHO WILL PAY
Seller of immovable property will be responsible to pay the tax on sale, transfer, registering & attesting of immovable property under section 236c of the Income Tax Ordinance 2001.
TAX RATE
For Filer, Tax Rate @1% of the gross amount of the consideration received on Sale of Immovable Property.
For Non-Filer, Tax Rate @2% of the gross amount of the consideration received on Sale of Immovable Property.
Under Section 236K, an advanced tax of 1% of fair market value for filers, and 2% of fair market value for non-filers on purchase or transfer of immovable properties is applicable. Under this section, the threshold of Rs.4 million has been abolished and withholding tax on purchase is to be collected irrespective of the property’s value.
Both Advance tax is adjustable against Income tax liability.
WHO WILL PAY
Purchaser of immovable property will be responsible to pay the tax on Purchase of immovable property under section 236k of the Income Tax Ordinance 2001.
TAX RATE
For Filer, Tax Rate @1% of the gross amount of the fair market value on purchase of Immovable Property.
For Non-Filer, Tax Rate @2% of the gross amount of the fair market value on purchase of Immovable Property.
TAX RATES BEFORE AMENDMENTS
Before tax year 2019-2020 the advance rate was above 4 Million property only at the following rates,
For Buyer
2 % For Filer 4 % For Non-Filer
For Seller
1 % For Filer & 2 % For Non Filer
ADVANCE INCOME TAX ON PAYMENT OF INSTALLMENTS FOR PURCHASE OF IMMOVABLE PROPERTIES ( SEC 236K(3) )
Advance Income Tax on payment of installments on purchase of or allotment of immovable property where transfer is to be done after completion of payment of all installments.
TAX RATE
For Filer, Tax Rate @1% of the gross amount of the fair market value on purchase of Immovable Property.
For Non-Filer, Tax Rate @2% of the gross amount of the fair market value on purchase of Immovable Property.
WHEN TO PAY
Advance Income Tax under this section will be paid on Payment of Installments on immovable properties from the purchaser or allottee of immovable properties.
TIME OF DEPOSIT OF TAX ON PURCHASE & SALE OF IMMOVABLE PROPERTIES – UNDER SECTION 236C & 236K
According to Rule 43(a) of the Income Tax Rules 2001, in case of Federal / provincial Government the above mentioned advance taxes will be deposited on the day the tax is deducted. According to Rule 43(b), In all other cases (other than Federal / Provincial Government cases) tax will have to deposit within 7 days from the end of each week ending on every Sunday.
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