Lahore: As reported by a news source on July 10, the Federal Board of Revenue (FBR) modified its tax withholding (WHT) regulations impacting motor vehicle transactions, salary income, and the purchase and purchase of immovable property. These changes, effective from July 1, 2024, are expected to streamline tax collection processes and ensure greater compliance across various sectors.
As per the details, the new provisions are outlined in a notification directing Inland Revenue chief commissioners to ensure compliance with these updated rules. The revisions reflect the FBR’s ongoing efforts to modernize tax laws and create a more equitable tax system.o
Key changes for immovable property transactions:
Withholding tax rates for the sale of immovable property vary based on the type of property and the duration of ownership, impacting filers, late filers, and non-filers differently.
For filers:
- 3% for transactions up to PKR 50 million
- 3.5% for transactions exceeding PKR 50 million but up to PKR 100 million
- 4% for transactions over PKR 100 million
For late filers:
- 6% for transactions up to PKR 50 million
- 7% for transactions exceeding PKR 50 million but up to PKR 100 million
- 8% for transactions over PKR 100 million
For non-filers:
- A flat rate of 10% on the gross consideration
- The valuation of the property and the tax laws established by the local government determine the tax on withholding charges for the acquisition of immovable property.
For filers:
- 3% for fair market values up to PKR 50 million
- 3.5% for values exceeding PKR 50 million but up to PKR 100 million
- 4% for values over PKR 100 million
For late filers:
- 6% for fair market values up to PKR 50 million
- 7% for values exceeding PKR 50 million but up to PKR 100 million
- 8% for values over PKR 100 million
For non-filers:
- 12% for values up to PKR 50 million
- 16% for values exceeding PKR 50 million but up to PKR 100 million
- 20% for values over PKR 100 million
In addition to property transactions, the notification introduces new regulations for motor vehicle transactions and salary income, aiming to cover a broader spectrum of tax liabilities.
Furthermore, the notification removes specific exemptions previously granted to manufacturers, commercial importers, wholesalers, dealers, and distributors. This change mandates tax deductions irrespective of the sector involved, thereby promoting uniformity in tax application and closing loopholes that previously allowed certain businesses to avoid taxes.
Certain modifications are intended to improve tax compliance and guarantee equitable taxation in certain industries. The FBR’s updated regulations are part of a broader strategy to increase tax revenues, improve governance, and support the country’s economic stability. As the new rules come into effect, taxpayers are encouraged to familiarize themselves with the changes to ensure compliance and avoid potential penalties. The FBR remains committed to facilitating taxpayer understanding and cooperation through ongoing communication and support initiatives.
