Property Sales Tax for Filers and Non-Filers in 2024-25

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Property Sales Tax

Property Sales Tax for Filers and Non-Filers in 2024-25

The fiscal year 2024-25 brings significant changes to property sales tax in Pakistan, targeting both filers and non-filers with distinct tax rates. These changes aim to enhance economic documentation and increase government revenue from the real estate sector.

New Tax Rates in Budget 2024-25

The newly notified budget shows that Federal Finance Minister Muhammad Aurangzeb has proposed to impose a property tax of 15% on the purchasing and selling of property for filers. This is quite a demonstrative gear up of the CGT directed towards achieving better regulation and efficiency of property turnover.

On the other hand, non-filers will face higher rates of up to 45% on similar transactions. Such a drastic variation signifies the intention of the government to strive for more people’s registration as taxpayers as well as for a developed paperwork economy. The overall management and control objective is to earn Rs. 477.11 billion in property income tax in the next financial year.

Capital Gains Tax (CGT) Details

CGT is levied on the profit earned from selling immovable property. The updated tax rates effective from July 1, 2024, are as follows:

  • Filers: 15%
  • Non-Filers: 15-45% (variable based on property value, determined by the Federal Board of Revenue (FBR))

Previously, CGT varied depending on the holding period and type of property, but the new policy standardizes the rate regardless of these factors.

Advance Property Tax or Withholding Tax

The advance property tax is applicable upon the sale or purchase of any immovable property. It is crucial for both buyers and sellers to be aware of the following tax rates:

Taxpayer

Property Value up to 50 Million

Property Value 50-100 Million

Value of Property over 100 Million

Filer

3%

3.5%

4%

Late-filer

6%

7%

8%

Non-filer Buyer

12%

16%

20%

Non-filer Seller

10%

  

Federal Excise Duty (FED)

Also, the Federal Excise Duty (FED) is chargeable in the process of allotment or transfer of commercial and or residential properties. Both types face a rate of 5%; however, it is essential to mention that FED on residential properties only applies to the first owner.

Implications for Real Estate Investors

For those looking at investment opportunities, such as a plot for sale in Islamabad or 5 Marla plots for sale in Islamabad, these tax changes are critical to consider. The increased tax rates for non-filers could significantly impact the overall cost of property transactions, making it more advantageous to ensure proper tax filing status.

Conclusion

Along with envisioning the structure of property tax for the financial year 2024-25, its enhancements also promote the principles of transparency and accountability in Pakistan’s property market. The government aims at more people filing their taxes in order to pave way for more formalization of the economy and in turn benefiting the population. For the filer and non filer, it is important to always update oneself with these changes is important to in making good decisions on real estate.

These tips provide a clearer view of the new tax policies affecting both the buyers as well as the sellers to prepare for the fiscally altered world.