FBR issues new IT-5 form for immovable property sellers

The Federal Board of Revenue (FBR) has made it mandatory for the sellers of immovable property including plots, flats, buildings and agricultural land etc to submit a new application form ie IT-5 to the registering/transferring authorities for sale/transfer of the property/land.
In this connection, the FBR on Thursday issued IT-5 form ie an application to the registering/transferring authorities for sale/transfer of immovable property. According to the new form, the sellers, buyers and Registering/Transferring Authority of Immovable Property (such as plots, buildings, flats, agricultural land, etc) can pay withholding tax u/s 236 of the Income Tax Ordinance 2001 and get a Computerised Payment Receipt (CPR) issued by NBP/SBP.
Experts explained that the FBR had introduced a new Form IT-5 for sellers of property. It is an application to the Registering/Transferring Authority for sale/transfer of immovable property, wherein the seller of property shall pay 0.5 percent withholding tax under newly introduced section 236C of the Income Tax Ordinance, 2001, which is sort of advance income tax on sale or transfer of immovable property.
The registering or transferring authority would have to make four copies of the IT-5 form. The original copy would be retained by the registering/transferring authority and the remaining three copies be distributed among seller, buyer and concerned Regional Tax Office of the FBR. The last copy to the RTO would enable the BR to know about the property transaction for the imposition of capital gain tax on the immovable property.
The registering or transferring authorities would have to ensure that withholding tax u/s 236 of the Income Tax Ordinance 2001 has been paid by the sellers and one copy has been sent to the Regional Tax Office concerned. Through Finance Act, 2012, Capital Gain tax on immovable property has been introduced for the first time, which definitely works as an additional revenue generating measure. The gain on sale of such property within two years of acquisition shall be taxed in the laid down manner: Where the holding period of immovable property is up to one year, the rate of tax would be 10 percent and where the holding period of property is more than one year but less than two years, the rate of tax would be five percent.
By virtue of this amendment through Finance Act, 2012, gain on sale of immovable property becomes taxable under the head capital gain however immovable properties sold beyond holding period of two years would bear the character of capital assets but are not taxable.
Similarly, another withholding tax provision has also been introduced through Finance Act, 2012 ie, Section 236C of the Income Tax Ordinance, 2001. As per newly introduced provisions of the law, any person responsible for registering or attesting transfer of any immovable property shall at the time of registering or attesting the transfer shall collect from the seller or transferor advance tax at the rate specified in Division X of Part IV of the First Schedule.
Sources said the move appears to be a strong documentation measure at the part of FBR to collect data from most undocumented sector for which certain particulars have been sought from the buyer and seller of immovable property. At the time of sale/purchase transaction of immovable property, following particulars shall be filed by both ends (buyer/seller):- name of seller/owner, CNIC/NTN/PP of seller, name of buyer, CNIC/NTN/PP of buyer, location and particulars of property such as whether it is commercial, residential or agricultural and status of property like, building, flat, plot or land, value of property and tax computation, like, date of purchase of property and date of sale/transfer. Sale price and whether sold within a period of two years from the date of purchase and withholding tax calculation etc.