Before a builder or developer can sell their property, they must obtain approval for their building plans and pay an advance tax. This tax is a percentage of the total tax they are expected to pay, as determined by the specific rates and categories outlined in the Income Tax Ordinance.
Mode and Manner for Payment and Collection of Tax from Builders
- Builder’s Obligations:
- After obtaining building plan approval and NOC to sell, the builder must:
- Submit a copy of the building plan online to the Chief Commissioner.
- Provide evidence of paying 5% of the estimated total tax.
- Calculate the final tax liability based on the covered area and rates in Division VIIIA of the Income Tax Ordinance.
- After obtaining building plan approval and NOC to sell, the builder must:
- Chief Commissioner’s Responsibilities:
- Verify the builder’s calculations and conduct necessary inquiries.
- Issue an online schedule of advance tax installments.
- Payment Schedule:
- The tax is paid in equal installments over four-month periods.
- The payment period starts from the issuance of the NOC to sell and ends upon project completion.
- Builders can opt for a lump sum payment instead of installments.
Application For Issuance Of Schedule Of Installments For Payment Of Tax U/S 7c Of The Income Tax Ordinance 2001 can be filed in the manner provided in SRO 787 Of 2016
Process Summary:
- Builder obtains building plan approval and NOC to sell.
- Builder submits building plan, pays 5% initial tax, and calculates total tax liability.
- Chief Commissioner verifies the builder’s calculations and issues a payment schedule.
- Builder pays tax in installments or as a lump sum.
Tax on Builders
Location | Building Type | Area (sq ft) | Rate/sq ft |
---|---|---|---|
Karachi, Lahore, Islamabad | Commercial | All | Rs. 210 |
Karachi, Lahore, Islamabad | Residential | Up to 750 | Rs. 20 |
Karachi, Lahore, Islamabad | Residential | 751-1500 | Rs. 40 |
Karachi, Lahore, Islamabad | Residential | 1501+ | Rs. 70 |
Hyderabad, Sukkur, Multan, Faisalabad, Rawalpindi, Gujranwala, Sahiwal, Peshawar, Mardan, Abbottabad, Quetta | Commercial | All | Rs. 210 |
Hyderabad, Sukkur, Multan, Faisalabad, Rawalpindi, Gujranwala, Sahiwal, Peshawar, Mardan, Abbottabad, Quetta | Residential | Up to 750 | Rs. 15 |
Hyderabad, Sukkur, Multan, Faisalabad, Rawalpindi, Gujranwala, Sahiwal, Peshawar, Mardan, Abbottabad, Quetta | Residential | 751-1500 | Rs. 35 |
Hyderabad, Sukkur, Multan, Faisalabad, Rawalpindi, Gujranwala, Sahiwal, Peshawar, Mardan, Abbottabad, Quetta | Residential | 1501+ | Rs. 55 |
Other Urban Areas | Commercial | All | Rs. 210 |
Other Urban Areas | Residential | Up to 750 | Rs. 10 |
Other Urban Areas | Residential | 751-1500 | Rs. 25 |
Other Urban Areas | Residential | 1501+ | Rs. 35 |
Tax on Developers
Location | Plot Type | Area (sq yd) | Rate/sq yd |
---|---|---|---|
Karachi, Lahore, Islamabad | Commercial | All | Rs. 210 |
Karachi, Lahore, Islamabad | Residential | Up to 120 | Rs. 20 |
Karachi, Lahore, Islamabad | Residential | 121-200 | Rs. 40 |
Karachi, Lahore, Islamabad | Residential | 201+ | Rs. 70 |
Hyderabad, Sukkur, Multan, Faisalabad, Rawalpindi, Gujranwala, Sahiwal, Peshawar, Mardan, Abbottabad, Quetta | Commercial | All | Rs. 210 |
Hyderabad, Sukkur, Multan, Faisalabad, Rawalpindi, Gujranwala, Sahiwal, Peshawar, Mardan, Abbottabad, Quetta | Residential | Up to 120 | Rs. 15 |
Hyderabad, Sukkur, Multan, Faisalabad, Rawalpindi, Gujranwala, Sahiwal, Peshawar, Mardan, Abbottabad, Quetta | Residential | 121-200 | Rs. 35 |
Hyderabad, Sukkur, Multan, Faisalabad, Rawalpindi, Gujranwala, Sahiwal, Peshawar, Mardan, Abbottabad, Quetta | Residential | 201+ | Rs. 55 |
Other Urban Areas | Commercial | All | Rs. 210 |
Other Urban Areas | Residential | Up to 120 | Rs. 10 |
Other Urban Areas | Residential | 121-200 | Rs. 25 |
Other Urban Areas | Residential | 201+ | Rs. 35 |