Islamabad: The Federal Board of Revenue (FBR) has announced that non-filers will be charged a 7 percent Federal Excise Duty (FED) on the allotment or transfer of property. This information was disclosed in a report on July 25.
According to the details, this new tax measure targets commercial properties and the first allotment or transfer of open plots or residential properties. The key criterion for this tax is whether the buyer is listed on the Active Taxpayer List (ATL) under section 181A of the Income Tax Ordinance, 2001, at the time of acquisition. If the buyer is not on the ATL, they will face the 7 percent FED.
For buyers who have missed the deadline for filing their income tax returns as specified in the proviso to Rule 1A of the Tenth Schedule to the Income Tax Ordinance, 2001, the duty rate will be 5 percent. This slightly reduced rate is still a significant measure aimed at encouraging timely tax filing and compliance among property buyers.
Furthermore, for those who are listed on the ATL, the FED will be 3 percent of the gross amount of the transaction. This lower rate is designed to incentivize taxpayers to remain compliant and ensure their names are on the active taxpayer list. The duty will apply to the allotment or transfer of commercial property and the first allotment or transfer of open plots or residential properties by any developer or builder.
This move by the FBR is part of a broader strategy to increase tax compliance and broaden the tax base. By imposing higher duties on non-filers and those who delay their tax filings, the FBR aims to encourage more property buyers to register and file their taxes on time. This policy is also expected to generate additional revenue from the real estate sector, which has historically been challenging to tax effectively.
The FED on property transfers is a significant step toward ensuring that all property transactions are accounted for and that tax obligations are met. Property developers and buyers must now consider these additional costs when planning their transactions, especially if they are not compliant with tax filing requirements.
The introduction of this tax highlights the FBR’s ongoing efforts to enhance revenue collection and enforce tax regulations more stringently. It also serves as a reminder to taxpayers of the importance of maintaining their status on the active taxpayer list to benefit from lower tax rates. This policy change is expected to have a notable impact on the real estate market, particularly affecting non-filers and late filers.
