The FBR (Federal Board of Revenue) has amended tax rates on sale and purchase of immovable properties. Which applicable during the tax year 2021 (July 01, 2020, to June 30, 2021). Similarly, Income Tax Ordinance, 2001 (updated June 30, 2020) after amendments added through Finance Act, 2020. This article describes benefits being a filer in respect of Advance Tax On Sale & Purchase of Immovable Property. The FBR has ruled the Advance Tax On Sale & Purchase of Immovable Property, under section 236C & 236K, as follow:
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Withholding Tax paid by Seller
Advance tax on Immovable property u/s 236C of Income Tax Ordinance, 2001 the withholding tax is to be charged on the merchant of immovable property. Each individual enrolling, recording or validating, or transferring of immovable property, lodging specialists, lodging society, co-operative society, and registrar or properties will deduct/gather the withholding tax from the merchant of the immovable property at the hour of enlisting, recording, or verifying the exchange.
The tax rate will be 1% of the gross cash proceeds of the consideration. In the event of an individual not showing up on the Active Taxpayers List (ATL). Then the tax rate will be 2% of the gross cash proceeds of the consideration.
The withholding tax will be the least amount of tax if the property is obtained and arranged off inside a similar tax year; in any case, the tax will be customizable. Advance tax, under this segment, isn’t gathered if the immovable property is held for a period surpassing four years.
Capital Gain & WHT Tax On Immovable Property
Federal GOVT. has announced new measures on sale & purchase of Immovable Asset and Capital Gain Tax, Check out the Tax rates for 2023.
Withholding Tax paid by Purchaser
Advance Tax on purchase of immovable property u/s 236K (1) of Income Tax Ordinance, 2001. The Withholding tax will be gathered from the buyer of the immovable property. Each individual enrolling, recording or validating, or transferring of immovable property, lodging specialists, lodging society, co-operative society, and registrar or properties will deduct/gather the withholding tax from the buyer of the immovable property at the hour of enlisting, recording, or verifying the exchange.
The withholding tax rate will be 1% of the fair market value. Likewise in the event that the individual isn’t on the ATL. Then the tax rate will be 2% of the fair market value.
The withholding tax will be adjustable against the annual arising payable tax liability.
Advance Tax on payment of installment for the purchase of allotment of immovable property u/s 236K (3) of the Ordinance. Which clarifies the withholding tax rate. Where a transfer to allottee of immovable is to be effected after making payment of all installments. Any individual liable for the assortment of installments in a portion will deduct/gather from the buyer or allottee of the immovable property at the hour of installment of the portion.
The withholding tax rate will be 1% of the fair market value. Likewise in the event that the individual isn’t on the ATL. Then the tax rate will be 2% of the fair market value.
People in developed Societies pay taxes. You should also read the Benefits for Filler section articles. This describes well the benefits of being a responsible resident of Pakistan
