The fiscal year 2024-25 introduces substantial revisions to property sales tax in Pakistan, impacting both filers and non-filers. These changes are part of the government’s efforts to improve economic documentation and boost revenue from the real estate sector.
Key Changes in the 2024-25 Budget
In the recent budget, Federal Finance Minister Muhammad Aurangzeb detailed significant tax adjustments. Filers will now encounter a 15% tax rate on property transactions, marking a significant hike intended to regulate and streamline the market.
Non-filers face a more severe tax regime, with rates rising to as much as 45%. This measure aims to encourage tax compliance among property buyers and sellers. The government’s objective is to collect Rs 477.11 billion from property income taxes in the upcoming fiscal year.
Capital Gains Tax (CGT) Revisions
Capital Gains Tax, imposed on profits from the sale of immovable property, has seen changes. Effective July 1, 2024, the rates are structured as follows:
- Filers: 15%
- Non-Filers: 15-45%, variable based on the property’s value, determined by the Federal Board of Revenue (FBR)
The revised policy standardizes the CGT rate, removing previous dependencies on holding periods and property types.
Advance Property Tax or Withholding Tax
The advance property tax, applicable upon the sale or purchase of immovable property, has new rates. It is essential for both buyers and sellers to note the following:
Property Value up to 50 Million:
- Filers: 3%
- Late-filers: 6%
- Non-filer Buyers: 12%
The Property Value 50-100 Million:
- Filers: 3.5%
- Late-filers: 7%
- Non-filer Buyers: 16%
Property Value over 100 Million:
- Filers: 4%
- Late-filers: 8%
- Non-filer Buyers: 20%
Non-filer Sellers:
- 10% regardless of property value.
Federal Excise Duty (FED)
The Federal Excise Duty (FED) on property transactions also sees updates. It applies a 5% duty on the allotment or transfer of both commercial and residential properties, with the latter applicable only to the first owner.
Implications for Real Estate Buyers and Sellers
Potential buyers and sellers, especially those looking for a plot for sale in Pakistan or 5 Marla plots for sale in Rawalpindi, should consider these new tax regulations. The higher rates for non-filers could significantly affect transaction costs, making tax compliance more advantageous.
Conclusion
Proposed changes to property tax rates for 2024-25 would mean greater efficiency of the real estate market in Pakistan and its complete transparency. With the help of developed organizations and documentation of the market, the government wants to improve tax compliance for the welfare of the economy and the public. This is because knowing these changes is very vital if real estate decisions are to be well made.
These peculiarities provide a clear understanding of the new tax policies that are conducive to both buyers and sellers so that such fiscal changes can be awaited.
