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:

• Active (Filers): Individuals who have registered with the Federal Board of Revenue (FBR) and submit their tax returns.
• Active (Late Filers): Individuals who have not filed tax return for past three years within due date.
• Inactive (Non-Filers): Individuals who haven’t registered with the FBR or submitted tax returns.

? The “Active (Late Filer)” category is a recent addition, applicable from November 1, 2024. To check your status, visit the FBR’s Active Taxpayer List.

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:

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:

For specific property rates and additional details, visit the official Property Rates by FBR.

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#property-tax-calculator {
max-width: 400px;
margin: auto;
padding: 20px;
border: 1px solid #ccc;
border-radius: 5px;
background-color: #f9f9f9;
}
#property-tax-calculator label {
display: inline-block;
width: 150px;
font-weight: bold;
margin-bottom: 10px;
}
#property-tax-calculator select,
#property-tax-calculator input {
display: inline-block;
width: calc(100% - 160px);
margin-bottom: 10px;
}
#property-tax-calculator button {
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margin: 20px auto;
padding: 10px 20px;
background-color: #0073aa;
color: #fff;
border: none;
border-radius: 5px;
cursor: pointer;
}
#property-tax-calculator button:hover {
background-color: #005177;
}
#taxResult {
margin-top: 20px;
font-weight: bold;
color: #333;
}
</style>

<script>
function calculateTax() {
const transactionType = document.getElementById("transactionType").value;
const taxpayerStatus = document.getElementById("taxpayerStatus").value;
const propertyValue = parseFloat(document.getElementById("propertyValue").value);
let taxRate = 0;

if (transactionType === "buy") {
if (taxpayerStatus === "filer") {
taxRate = propertyValue <= 50000000 ? 0.03 :
propertyValue <= 100000000 ? 0.035 : 0.04;
} else if (taxpayerStatus === "latefiler") {
taxRate = propertyValue <= 50000000 ? 0.06 :
propertyValue <= 100000000 ? 0.07 : 0.08;
} else if (taxpayerStatus === "nonfiler") {
taxRate = propertyValue <= 50000000 ? 0.12 :
propertyValue <= 100000000 ? 0.16 : 0.20;
}
} else if (transactionType === "sell") {
if (taxpayerStatus === "filer") {
taxRate = propertyValue <= 50000000 ? 0.03 :
propertyValue <= 100000000 ? 0.035 : 0.04;
} else if (taxpayerStatus === "latefiler") {
taxRate = propertyValue <= 50000000 ? 0.06 :
propertyValue <= 100000000 ? 0.07 : 0.08;
} else if (taxpayerStatus === "nonfiler") {
taxRate = propertyValue <= 50000000 ? 0.10 :
propertyValue <= 100000000 ? 0.10 : 0.10;
}
}

const taxAmount = propertyValue * taxRate;
document.getElementById("taxResult").innerHTML =
`

Tax Amount: Rs. ${taxAmount.toFixed(2)}

`;
}
</script>

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.

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.