Government plans to increase taxes for those not filing tax returns when buying and selling real estate in the 2023-24 budget. This aims to properly record plot transactions within private housing societies.
These societies often avoid withholding taxes during plot transactions. The goal is to target registered property agents handling these deals.
Many societies dodge taxes by not recording actual transfers, letting plot transactions happen tax-free. The Federal Board of Revenue (FBR) will act in the upcoming budget to make sure buyers, sellers, and transactions are recorded, and taxes are paid.
Legal changes will guarantee tax payments on plot transactions by these societies and record all real estate transactions.
Currently, the tax rate for non-active taxpayers buying property has gone up from 100% to 250%. For those not on the Active Taxpayers List buying property, the tax under section 236K has increased by 250% of the rate stated in Division XVIII of Part IV of the First Schedule. This change is noted in rule 1 of the Tenth Schedule to the Income Tax Ordinance.
The FBR will update property values from July 1, 2023. They’re updating property valuation tables across Pakistan with provincial authorities.
The FBR has asked senior Board of Revenue members from various provinces to instruct division/district heads to nominate representatives for consultation with Regional Tax Office commissioners.
The FBR is currently implementing tax reforms, including the Pakistan Raises Revenue Project (PRRP), under World Bank guidance. A major goal is to harmonize property valuation between the FBR and provincial governments/districts.