FBR Implements Revised Rates for Withholding Taxes on Property Transactions

The Federal Board of Revenue (FBR) has recently announced the implementation of revised rates for withholding taxes on buyers and sellers of immovable properties, effective from July 1, 2023, under the Finance Act 2023. These changes aim to enhance tax collections and streamline the taxation system in the real estate sector.

Under the revised rates, the withholding tax for filers of income tax returns on the sale or transfer of immovable property, as per section 236C, has been increased from 2 percent to 3 percent. Non-filers, on the other hand, will now be subject to a higher withholding tax rate of 6 percent, up from the previous 4 percent.

Similarly, for the purchase or transfer of immovable property, the withholding tax rates under section 236C have also been revised. Filers will now be required to pay 3 percent in advance tax, compared to the previous rate of 2 percent. Non-filers, however, will face a significant increase in the withholding tax rate, from 7 percent to 10.5 percent.

These changes, introduced through the Finance Act 2023, are aimed at encouraging tax compliance among property buyers and sellers. By increasing the tax rates, the FBR seeks to ensure a fair and transparent taxation system in line with the national fiscal objectives.

The FBR has instructed its field formations to implement the revised rates from July 1, 2023. Property buyers and sellers are advised to familiarise themselves with the updated tax rates and comply with the new regulations to avoid any potential penalties or legal implications.

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