In this blog, we will discuss in detail the new FBR Taxes on property and how it will impact the real estate market of Pakistan. Taxation is important for every country, to develop its infrastructure, facilitate the public, and use the tax money for the welfare of society. An overview of the latest taxes on property in 2024;
Stamp Duty Tax: 4% for filers & non-filers
Registration Fee: 1% for filers & non-filers
Advance Tax: 3% for filers & 10% for non-filers
Gain Tax: 3% for filers & 7% for non-filers
7E Tax: 1% for filers & non-filers
Since its inception, Pakistan has seen a low trend in tax payments as those eligible to pay the due taxes show reluctance towards tax payments. Every new government implements measures to collect colossal taxes. However, most of the time, regulations are rejected by the business community, investors, and conglomerates. And ultimately, the government has to review their notifications.
This time again, as the new government has been established, FBR has taken a few steps to regularize property investments by bringing them into the tax net. It will help clean the market and collect revenue for the national exchequer. Let’s review the new FBR Taxes on property and investments.
What are the New FBR Taxes on Property?
According to the recent notification, there will be new FBR Taxes on property purchased in installments. Advance Tax which was 3% previously on buying and selling the property will now be increased to 4%. Currently, non-filers are obliged to pay 7% withholding and 4% gain tax on selling the plot files. According to the new FBR Taxes on property, now 5% tax will be applicable on buying a plot file.
Not just the buyers of plot files, but the developers of housing societies will also have to pay a certain amount according to the new FBR taxes on the property.
Moreover, sellers who are filers will pay 1% and the non-filer sellers will pay 2% tax while selling the property.
New FBR Taxes on Capital Gain
5% Capital Gain Tax on Capital Gain below Rs. 5 Million
10% Capital Gain Tax on Capital Gain below Rs. 10 Million
15% Capital Gain Tax on Capital Gain below Rs. 15 Million
20% Capital Gain Tax on Capital Gain above Rs. 15 Million
FBR to Issue New Property Rates With Higher Tax From July 2024
Impact of New FBR Taxes on Property
The recent initiative by the Federal Bureau of Revenue (FBR), to expand the tax net in the real estate sector, will positively impact the real estate sector.
More Regulation to Stop Overselling
Every other day, we hear cases of one plot having multiple owners. It is due to the overselling of plot files a major problem small investors and homebuyers face in the market. Suppose a developer purchases land of 15,000 kanals, consisting of approximately 12,000 plots. However, he sells the files of 15,000 plots. This means he has sold 3000 plots that do not even exist.
Therefore, to avoid such problems and to secure the plot buyers, the new FBR taxes on the property will eliminate the overselling of plot files, compelling the developers to pay tax for the land under their ownership. The trend of booking a plot before mapping will be discouraged. It will make the process more transparent, thus, making real estate investments more secure and reliable.
Invest in RDA-approved projects with 100% tax exemption
To facilitate small investors and first-time home buyers, real estate companies offer easy investment plans. MGC Developments is one of the most reliable builders and real estate development companies in Islamabad. MGC offers you to buy your home, shop, or any other unit in the RDA-approved project MGC Jewel and avail 100% tax exemption. The company will pay your tax in installments to FBR on your behalf. This initiative has created ease for those who cannot build their dream home or business due to heavy taxes.
Click here to know everything about MGC Jewel
SBP to Issue New Currency Rates
The State Bank of Pakistan is expected to launch new currency notes by the end of June 2024. It is considered a step towards getting out all the dumped money. Like a few other industries, the real estate market will see a boom of investments in the coming months as people will tend to invest their cash into properties before the new notes are rolled out.