ISLAMABAD: The Federal Board of Revenue (FBR) has decided not to collect advance income tax on immovable property transactions held for a period exceeding three years under Section 236C of the Income Tax Ordinance.
Income earned as gain from disposal of the property is subject to tax under section 37 of the Income Tax Ordinance, 2001 under the head income from capital gain. Also, there is no tax on income from capital gain under the aforesaid section, if the holding period of immovable property is more than three years. However, where a person makes investment but fails to explain the source of such investment, the amount so invested is treated as income from unexplained sources under section 111 and is taxable as income from other sources under section 39 of the said Ordinance, the FBR said.
In respect of business income of a person earned from a long-term construction contract, the tax imposed under section 36 of the Income Tax Ordinance, 2001 is on the basis of the percentage of completion method. Besides, advance income tax under sections 236C and 236K introduced through Finance Acts, 2012 and 2014 respectively is adjustable against the ultimate tax liability of the taxpayer and if there is no tax liability, the same is refunded, the FBR said.
