| Lahore: The Federal Board of Revenue (FBR) has released comprehensive guidelines concerning tax payment for property sellers and transferors, aimed at streamlining property transactions and ensuring tax compliance, according to news published on July 25.
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The revenue department, along with development authorities and other concerned authorities, has resumed handling the transfer of immovable properties across the province. This comes after the Federal Board of Revenue (FBR) clarified the insertion of subsection 2(A) in section 236(C) of the income ordinance and issued new guidelines and criteria for property transactions.
A senior Lahore Development Authority (LDA) official (whose name was not disclosed) stated that they have resumed property transfer and registration operations in accordance with the FBR’s updated criteria.
Previously, all property transfer cases in the province were put on hold from July 1, prompting the development authorities, including LDA, to seek clarification from the FBR to resume their functions. The newly introduced sub-section 2(A) of section 236C in the Income Tax Ordinance 2001 requires that any person responsible for registering, recording, or attesting the transfer of immovable property must ensure that the seller or transferor has discharged their tax liability under Section 7E. The evidence of tax payment needs to be furnished to the concerned authority in the prescribed mode, form, and manner. Through the Finance Act 2022, Section 7E was introduced, treating every resident person as having derived income equal to 5% of the fair market value of their capital asset situated in Pakistan for the tax year 2022 onwards. This deemed income is subject to a tax rate of 20% (effective rate of 1% of the fair market value of immovable property).
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The FBR issued clarification, guidelines, and criteria for transferring and registering immovable properties, such as plots, houses, commercial, and industrial buildings. The rate of tax collection is 3% of the gross amount of consideration for sellers or transferors on the Active Taxpayers List (ATL) and 6% for non-ATL sellers or transferors.
ATL sellers or transferors need to provide evidence of tax payment to the transferring authority. If the tax has not been paid alongside their income tax return for tax year 2022, they must use a separate payment challan (CPR) available in the FBR online payment system. If the tax has already been declared and paid for tax year 2022, they need to obtain a certificate (Form ‘A’) from the Commissioner Inland Revenue having jurisdiction over them.
For non-ATL individuals, they must pay the tax under section 7E and provide evidence of payment using the separate payment challan (CPR) in the FBR online payment system. |
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