ISLAMABAD: The federal excise duty (FED), recently levied through the Finance Act, 2024, on transfer of plots and commercial property was challenged before the Sindh High Court (SHC).
The SHC has taken up the issue of imposition of FED on allotment or transfer of commercial properties and first allotment or first transfer of open plots or residential properties under Finance Act 2024.
It is learnt that the SHC has directed the Federal Board of Revenue (FBR) to submit comments on the issue.
In this regard, the FED on immovable properties within the jurisdiction of provinces has been challenged before the SHC.
FBR amends Federal Excise Rules, 2005
The FBR has notified two forms Form-A and Form-B. The Form-A is related to the computerized payment receipt (CPR-FE) and Form-B deals with the details of the payment of FED on property including name of buyer, location of property/area, consideration received and FED rate/ FED paid; etc.
According to the FBR’s procedure for collection of duty, every developer or builder at the time of allotment or transfer of commercial property and first allotment or first transfer of open plots or residential property shall collect duty at the rate of three percent of gross amount of consideration involved where the buyer is appearing on active taxpayers’ list maintained under Section 181A of the Income Tax Ordinance on the date of acquisition of the property.
The FED would be five percent of gross amount of consideration involved where the buyer has not filed the income tax return by due date as specified in proviso to rule IA of Tenth Schedule to the Ordinance.
The FED would be seven percent of gross amount of consideration involved where the buyer is not appearing on active taxpayers’ list maintained under Section 181A of the Ordinance, on the date of acquisition of the property.
The duty collected by developer or builder shall be credited to the federal government on the same day through a computerised payment receipt (CPR) or SWAPS payment receipt (SPR) as set out in the Form “A” attached. The developer or builder shall furnish to the commissioner a monthly statement as per Form “B” attached to these rules.
The rules said that where, for any reason, the duty is not paid or short paid, by way of credit to the federal government, by the developer or builder, the officer Inland Revenue having jurisdiction over the developer or builder for the purposes of the Act, shall proceed to collect the amount of duty so unpaid or short paid under section 14 of the Act and the amount of default surcharge under section 8 of the Act on the duty unpaid or short paid for the period commencing on the date on which the duty was due and ending on the date on which it was paid, the FBR said.
Where at the time of recovery of duty it is established that the duty that was to be collected from a person has meanwhile been paid by that person, no recovery shall be made from the developer or builder who had failed to collect the duty but the developer or builder shall be liable to pay the default surcharge at the rate as provided under Section 8 of the Act from the date person failed to collect the duty to the date the duty was paid, the FBR added.
The FBR has also notified that the developer means a person engaged in development of land for conversion into residential or commercial plots and sale thereof and includes a housing society, a cooperative society, a development authority or a similar entity engaged in the development of land for conversion into residential or commercial plots and sale thereof.
The builder means a person engaged in construction of residential or commercial buildings for sale thereof, and includes a housing society, a cooperative society, a development authority or a similar entity engaged in the same construction activity, the FBR added.
Copyright Business Recorder, 2024
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