ISLAMABAD: Federal Board of Revenue (FBR) has updated the withholding tax rates on sale and purchase of immovable properties for tax year 2021.
The FBR issued withholding tax card 2020-2021 (updated up to June 30, 2020) incorporating amendment to Income Tax Ordinance, 2001 through Finance Act, 2020.
Under Section 236C of Income Tax Ordinance, 2001 the withholding tax is to be collected on seller of immovable property.
Every person registering, recording or attesting or transfer including local authorities, housing authorities, housing society co-operative society and registrar or properties shall collect withholding tax from seller of immoveable property at the time of registering, recording or attesting the transfer.
The tax rate shall be one percent of the gross amount of the consideration received. In case of person not appearing on the Active Taxpayers list (ATL) the tax rate shall be two percent of the gross amount of the consideration received.
The withholding tax shall be minimum tax if property is acquired and disposed off within the same tax year; otherwise the tax shall be adjustable.
Advance tax, under this section, is not be collected if the immovable property is held for a period exceeding four years.
Under Section 236K of Income Tax Ordinance, 2001 the withholding tax shall be collected from purchaser of immovable property.
Under Section 236K (1) every person registering, recording or attesting or transfer including local authorities, housing authorities, housing society, co-operative society and registrar or properties shall deduct/collect withholding tax from the purchaser of immovable property at the time of registering, recording or attesting the transfer.
The withholding tax rate shall be one percent of the fair market value. In case the person is not on the ATL the tax rate shall be two percent of the fair market value.
The withheld tax shall be adjustable against total payable tax liability.
Section 236K (3) of the Ordinance deals with advance tax on payment of installment in respect of purchase of allotment of immovable property where transfer is to be effected after making payment of all installments.
Any person responsible for collection of payment in installment shall deduct/collect from the purchaser or allottee of the immovable property at the time of payment of installment.
The tax rate shall be one percent of the fair market value. In case the person is not on the ATL the tax shall be two percent of the fair market value.
The tax shall be adjustable against total tax liability.
