LAHORE: The Federal Board of Revenue (FBR) has withdrawn the holding period exemption for the collection of advance tax on sale or transfer of immovable property.

Sub-section (3) of section 236C of the Income Tax Ordinance, 2001 has been omitted.

“Now advance tax on sale or transfer of immovable property will be collected under this section irrespective of holding period,” the FBR added.

The Board has introduced changes through a notification in the Income Tax Ordinance 2001 for the collection of withholding taxes on sale or purchase of immovable property.

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According to the notification, the advance tax would be collected from every seller irrespective of the holding period. Earlier, an exemption was available for a seller if he held the property for at least 4 years.

Furthermore, the rate of tax for non-filers has been increased by 100% for 236C and 250% for 236K. The rate of advance tax on sale and purchase of immovable property has been enhanced by 100%.

The tax rate has been enhanced on property transaction through Finance Act, 2022. The FBR said the rate of advance tax on sale or transfer and on purchase or transfer of immovable property has been enhanced from 1% to 2%.

Meanwhile, in case of purchaser of immovable property who is not appearing on the active taxpayers list, rate of tax to be collected under section 236K of the Income Tax Ordinance, 2001, will increase by 250% of the rate specified in Division XVIII of Part IV of First Schedule. Necessary change has been incorporated in rule 1 of Tenth Schedule to the Income Tax Ordinance 2001, the FBR added.

Copyright Business Recorder, 2022