The recently announced Finance Act 2024 introduces changes to property transaction taxes. This article clarifies the new tax rates for both buying and selling immovable property (land, buildings, etc.), with a clear comparison for filers (those who submit tax returns) and non-filers.
Understanding Filers and Non-Filers:
- Filers: Individuals who have registered with the Federal Board of Revenue (FBR) and submit their tax returns.
- Non-Filers: Individuals who haven’t registered with the FBR or submitted tax returns.
- Late Filers: Individuals who have not filed tax return for past three years within due date.
The concept of immediate Active Filer is no more.
Tax on Buying Property (Section 236K):
This tax is deducted at source from the buyer and deposited with the government. Here’s a table summarizing the rates:
| Rs. in Million | Tax Rate (Filers) | Late Filers | Non-Filers |
| Up to 50 | 3% | 6% | 12% |
| Over 50 but not exceeding 100 | 3.5% | 7% | 16% |
| Over 100 | 4% | 8% | 20% |
Tax on Selling Property (Section 236C):
This tax is collected at source from the seller and deposited with the government. Here’s a table highlighting the key differences:
| Rs. in Million | Tax Rate (Filers) | Late Filers | Non-Filers |
| Up to 50 | 3% | 6% | 10% |
| Over 50 but not exceeding 100 | 3.5% | 7% | 10% |
| Over 100 | 4% | 8% | 10% |
Key Takeaways:
- Filers maintain the same tax rates for buying property compared to the previous year.
- Non-filers face a significant tax hike for both buying and selling property.
- There’s a substantial penalty for filers who haven’t filed their returns by the due date when selling property (increased tax rates of 6%, 7%, and 8% based on consideration value).
- If property is bought and sold within same year this tax is not adjustable.
Benefits of Being a Filer:
- Lower tax rates compared to non-filers for property transactions.
- Access to various benefits and opportunities offered by the government.
Exemption from 236C:
- Exemption for Dependents of Shaheeds and War Wounded: Individuals who are dependents of Shaheeds (martyrs) of the Pakistan Armed Forces or persons who died while serving in the armed forces or government are exempt from the tax.
- Exemption for Property Acquired Through Government Allotment: The exemption applies to the first sale of property acquired from or allotted by the federal or provincial government.
- Recognition of Service: The property must have been acquired or allotted as a recognition of the services rendered by the Shaheed or the deceased government servant.
- Exemption for War Wounded and Serving/Ex-Personnel: The exemption extends to war wounded personnel, serving and ex-servicemen of the armed forces, and serving and ex-employees of the federal and provincial government.
Also Read: New Duty Taxes Imposed on Property Transactions
Understanding these new tax rates is crucial for informed decision-making when buying or selling property in Pakistan. It incentivizes timely filing of tax returns to avoid penalties. Consulting with a tax advisor is recommended for specific guidance based on your individual circumstances.
Feb 22, 2024 03:00 PM Asia/Karachi
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If property is from ancestral and acquired by way of inheritance in the year 1982 then what will be the tax criteria
Capital Gains and 7E (if exempt) will not be payable. Rest of Taxes as above will be applicable.
No tax on inherited property
Yes but when inherited. If transfered to someone else, then that will be taxable.