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FBR Introduces Revised Withholding Tax Rates For Purchase And Sale Of Immovable Properties In FY 2023-24
The Federal Board of Revenue (FBR) has introduced higher
withholding tax rates on individuals buying or selling immovable property in
fiscal year 2023-2024. This move aims to improve tax compliance and broaden the
tax base.
The amendments specify that individuals not on the Active
Taxpayers List (ATL) must pay a much higher income tax rate of 10.5% when
acquiring property. Those on the ATL will pay only 3%.
The Finance Act of 2023, which amended the 2001 Income Tax
Ordinance, incorporated these changes. The updated tax withholding card for
2023-2024 outlines the new rates and regulations.
Individuals on the ATL will pay a withholding tax of 3% when
buying property. But those not on the ATL must pay 10.5%, significantly more.
This difference incentivizes taxpayers to join the ATL and contribute to
national revenue.
These changes align with government efforts to boost tax revenue
and curb evasion. The FBR has been modernizing and streamlining tax collection.
Withholding tax rates have also changed for property sales. Those
on the ATL will pay 3% of the sale amount, while those not on the ATL must pay
6%.
Income Tax Circular No. 2 of July 26, 2023 provides guidelines for
the new withholding tax rates and procedures for taxpayers and withholding
agents.
Any entity registering or transferring property must now collect
the appropriate withholding tax, based on the buyer or seller's ATL status.
