New Duty Taxes Imposed on Property Transactions

Pakistan’s parliament recently passed a new budget for the fiscal year 2025 (FY25), including significant changes to property taxes. Here’s a breakdown of the key points:

  • New Duty Rates: The government has imposed new taxes on property purchases, transfers, and allotments – particularly for commercial properties.
  • Tax Rate Based on Taxpayer Status: The tax rate you pay depends on whether you’re a registered taxpayer or not:
    • 3%: Applies to active taxpayers listed under section 181A of the Income Tax Ordinance (those who file taxes regularly).
    • 5%: Applies to those who filed income tax returns but not necessarily on time.
    • 7%: Applies to individuals not on the active taxpayer list (those who haven’t filed taxes recently).
  • First-Time Property Transfers: These new rates apply to:
    • Commercial Property: All transfers and allotments.
    • Residential Property: The first allotment or transfer by a developer or builder.
Taxpayer StatusDuty Rate on Allotment or Transfer
Active taxpayer3% of the gross amount
Filed income tax return by due date but not on Active Taxpayer List (ATL)5% of the gross amount
Not appearing on Active Taxpayer List (ATL)7% of the gross amount

What This Means for You:

  • If you’re a registered taxpayer and buying property, you’ll pay the lowest rate (3%).
  • If you haven’t filed taxes recently, you’ll face a higher tax burden (5% or 7%).
  • This is likely to encourage people to register as taxpayers and file their returns on time.

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