The Federal Board of Revenue (FBR) has issued a notification to explain the recently approved tax amnesty scheme for the real estate sector of Pakistan.
Per the notification, those looking to whiten their money would be required to pay regular taxes on property transactions and also a 3% tax on the difference between the property prices notified in FBR valuation tables and the rates recorded by the property registration authority in transfer documents.
Those availing the tax amnesty scheme would not be asked about the source of their income. In case the difference between the stated DC rate and the FBR rate is zero, the board would inquire about the source of income.
For the purpose of property tax calculation, the higher of the DC rate and the FBR rate of property would be considered. If the stated rate of property is less than the DC Rate, the tax authorities would consider the DC rate to calculate provincial taxes on property. On the other hand, if the stated rate of property is less than the FBR rate, the tax authorities will consider the FBR rate for the purpose of federal property tax calculation.
In addition to that, as per Section 236K of the Income Tax Ordinance 2001, tax-filing property buyers will pay 2% Advance Tax while non-filers will pay 4%. At the time of property transfer, property sellers registered as tax filers will pay 1% Advance Tax while non-filers will pay 2%.
FBR has also instructed the officers concerned to brief the staff at the tax collection offices about property taxes, for which the board has already sent its teams.
Related News
Hi Samra,
As per your opinion, the prices of property either increased/decreased/stable in near future.
Your expert opinion is required.
Thank You,
Very confusing
Anyone tell the impact of property price in karachi?
should we invest or wait?
What will be impact of property price in karachi now?
Should we invest or wait?
Start short-selling using all the black money you have. Welcome to Pakistan ruled by black mafia!
wait
I suggest you wait as impact of such policies can be measured after a while.
Agree, the notification it seems is purposely kept ambiguous to set a trap for those fall for the so called “amnesty”. Typically these would be small buyers with petty investments who will be harassed by FBR later. FBR is only a friend for those who can grease their palms.
Dear Hassan,
Let’s see how investors welcome the tax amnesty scheme. If you are a legit investor and have no issue in revealing your source of income then FBR is simply your friend.
I have a property in Satellite Tiwn Rawalpindi, The property is not commercial however most of the properties around this have been converted or being used for commercial purpose.
I am planning to sell the property as the vicinity is no longer a residential.
Could you please advise how much will I have to pay on sale of this property on account of taxes and other legal fees
Property size is 9 marlas. Anticipated selling price is 35 million
This an old property and we are living here for past 40 years
Regards
I dont think many would go for it to white their money as entering in this “so confusing” amnesty scheme.
Prices will remain same and this is a flop scheme.
gov should not proposed any such schemes as due to these, proper tax filers get upset.
I went through the SRO and there is no mention of the statement “the board would inquire about the source of income.”
Kindly pls share the relevant official document which shares this message?
Hello Samra,
Kindly share the official FBR document or notification which states “the board would inquire about the source of income.”.
As I could not find this in the SRO released by FBR on their website.
Hello Samra
I am overseas Pakistani holding Overseas national identity card what about tax exemption for property for overseas Pakistani. what about source of income of overseas.
Hello Samara
i wants to know about tax exemption for overseas pakistani
This is bit confusing for general public and real estate dealers as well.
I can not find official notification for this new tax law. Can you please share that as well.
What would be the impact on current property market in Pakistan especially in Lahore at large after this review?
Thanks
Prices: In a shorter term (at least a year), I think there would not be any impact on prices i.e. the market would remain stagnant at current level. Later, the market will normalize and will started to go up slowly at a more mature manner i.e. not an exorbitant increase is expected to witness which we saw earlier in projects led by Bahria Town and DHA, but in the way the prices behave in developed markets with taxation laws fully in place like in Canada, UK and now to a certain extent Dubai as well, after the burst of its bubble, … which is 5%-15% p.a. increase on average to a max. of 20% p.a. depending on location, master developer and amenities offered.
Transactions: The number of transactions is expected to increase a bit in a shorter term. That will be led largely by investors, who wants to take advantage of amnesty and to convert their black money. However, the market will continue to led by real buyers with real housing needs.
These real buyers will not be at an advantage in getting a ‘better value for money invested” as now the competition at level of developers will increase. They need to offer better projects at more attractive prices and payment plans. Location as usual would be the key :).
property prices will nose dive