The Federal Board of Revenue has updated its Withholding Tax Card for 2017/18 enforcing fixed percentages as advanced income tax for both, buyers and sellers, of immovable property and assets.
Non-filer seller of immovable property to pay 2% withholding tax
It has been reported that every seller of immovable property or asset, who is a non-filer of income tax returns, has to pay a withholding tax of 2 percent of its total value.
With respect to the Withholding Tax Card 2017/18, it has been mentioned in Section 236C of Income Tax Ordinance, 2001 that if a person, local authority, housing authority, housing society, cooperative society or registrar of properties, is willing to register, record, or attest the transfer, it is necessary for them to collect their withholding tax from the seller of immovable property at the time of registration, recording or attesting the transfer.
Yet, in a situation where an income tax return filer is the seller, he/she will only be required to pay 1 percent as the withholding tax. The WHT will be lowest if a property is acquired or rejected in the same year otherwise it will be adjustable.
Non-filer purchaser of immovable property to pay 4% advance tax
On the other hand, every purchaser has to pay an advance tax worth 4 percent of the total value if immovable property is priced above Rs. 4 million.
According to section 236K of Income Tax Ordinance, 2001, every person, local authority, housing authority, housing society, cooperative society or registrar of properties is registering, recording or attesting the transfer, has to collect an advance tax from the purchaser at the same time they are registering, recording or attesting the transfer.
However, the purchaser will only pay 2 percent of advance tax in case of filer of income tax return. If immovable property is worth Rs. 4 million or below then no advance tax will be charged.