Budget 2024-25: New Taxes on Real Estate

The Federal Board of Revenue has proposed new taxes on real estate to collect more revenue from one of the highest-yielding industries in Pakistan. The new slabs for Capital Gain Tax and Withholding Tax will come into effect from 1st July onwards if approved by the government. 

New Taxes on Real Estate

New Taxes on Real Estate in Pakistan 

According to new FBR proposals, a 15% Capital Gain Tax will be applied to filers, and 45% to non-filers. Analysts are commenting that increasing taxes on non-filers is a good initiative to bring non-filers into the tax net. However, tax experts showed disappointment in governments’ failure to bring non-filers into the tax net, willingly accepting them to be a non-filer community that deliberately avoids taxes. 

What is Capital Gain Tax on Property?

New Taxes on Real Estate

Capital Gain Tax on Property is the tax a property holder pays according to the profit they gain from selling the asset. For example, if you are a filer, selling the property you will have to pay a 15% Capital Gain Tax. Similarly, a non-filer will pay a 45% capital gain tax per the amount of profit on property sale. 

Categories of Capital Gain Tax 

There are further two categories short-term and long-term capital gain tax. Short-term is applied to assets that are owned for less than a year. Long-term is applied to the assets owned for more than a year. 

Currently, Capital Gain Tax is applied on immovable property (plots, flats, and constructed property), held from 1 up to 6 years, and the property holder doesn’t have to pay tax after that period. However, the new budget proposes that owners pay tax irrespective of the holding period. 

What is Withholding Tax on Property?

Withholding tax is the deduction from your income or expenditure by the government that can be claimed or refunded later. This way, the government encourages citizens to file income tax returns and declare any paid tax. 

FBR’s new proposal of withholding tax on the purchase and sale of property ranges from 3% to 12% for filers and non-filers respectively on a property valuing 50 million, and 3.5% to 16% on a property valuing 100 million.

Purchase of immovable property

Taxpayer Property value up to 50 million Property value up to 100 million Property value above 100 million
Filers 3% 3.5% 4%
Non-filers 12% 16% 20%

Sale of immovable property

Taxpayer Property value up to 50 million Property value up to 100 million Property value above 100 million
Filers 3% 4% 5%
Non-filers 10% 10% 10%

 

Other Taxes by FBR

FED

Products

10%  Stationary
6% Supply and import of plant machinery to tribal areas
10% Local supply of vermicelli, sheer mall, bun & rusk, 
10%  Oil cakes & tractors
18% Mobile phones
18%  Supply of leather & textile products

 

FBR also seems excited to generate an estimated Rs. 70bn through excise duty. Adding to acetate, nicotine pouches, and e-liquids, Rs.3 per kg of cement is proposed. Also, Rs. 15 per kg FED is applied to sugar supply to manufacturers. We will keep you informed about all the latest updates related to real estate taxes. 

Also read: Top AI solutions in Real Estate

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