The Federal Board of Revenue (FBR) Monday conveyed to the provincial boards of revenue that from July 1, 2022, the new rates of advance tax on sale/transfer and purchase of immovable properties would be applicable across the country.
In this connection, the FBR has issued a letter to all provincial boards of revenue and Capital Development Authority (CDA) here on Monday for implementation of the changes made in the Income Tax Ordinance 2001, through the Finance Act 2022.
According to the FBR’s instructions, the changes have been made with respect to sections 236C and 236K of Income Tax Ordinance, 2001 through Finance Act 2022.
The rate of advance tax on sale or transfer and on purchase or transfer of immovable property has been enhanced from 1 percent to 2 percent. Moreover, sub-section (3) of section 236C has been omitted. Now advance tax on the sale or transfer of immovable property will be collected under this section irrespective of the holding period. In the case of the purchaser of immovable property who is not appearing on the active taxpayers’ list, the rate of tax to be collected under section 236K will increase by 250 percent of the rate specified in Division XVIII of Part IV of First Schedule. Necessary change has been incorporated in rule 1 of the Tenth Schedule to the Ordinance.
The provincial boards of revenue have been informed that the new rates shall apply to all transfers that are executed on or after July 1, 2022, which means that the official document issued by the transferring authority must certify the execution of the transfer on or after July 1, 2022.
The FBR has also explained the removal of the time limit for collection of withholding tax u/s 236C. The sub-section (3) of Section 236C has now been omitted. Hence, withholding tax under Section 236C shall now be collected from every seller irrespective of the holding period. Further, as already in vogue, the tax rate for 236C shall be increased by 100 percent in the case of non-filers as per the Rule-1 of Tenth Schedule of Income Tax Ordinance, 2001 as indicated in the rate table.
The FBR has also explained the increased withholding tax u/s 236K for Persons Not Appearing on ATL. The tax rate for 236K shall be increased by 250 percent in the case of non-filers as per the amended Rule-1 of Tenth Schedule of Income Tax Ordinance, 2001 as indicated in the relevant table.
The provincial boards of revenue have been requested to ensure that the aforesaid changes are strictly followed by all property registration authorities under their control for correct collection and deposit of withholding taxes accordingly, FBR added.
