Non-filers should expect a further increase in the tax on the purchase and sale of immovable property in the upcoming budget (2023-2024).
What are the Taxes Now?
In the budget 2022-2023, the government increased the tax rate for people who are buying property and are not listed on the Active Taxpayers List. The rate increased from 100% to 250%.
Let’s see what comes for non-filers in the next budget.
Foreign Investors Urge Simplification of WHT
The Overseas Investors Chamber of Commerce and Industry (OICCI), an organization representing foreign investors in Pakistan, has urged for a simplified withholding tax system in the country’s forthcoming 2023-2024 budget. In their recommendations submitted to the Federal Board of Revenue (FBR), foreign investors have expressed their desire for a more streamlined tax framework.
What is Advance Income Tax/Withholding Tax?
Withholding tax (WHT) is in advance on certain transactions. It’s based on the idea that if someone earns a certain amount of money now, they will keep making a similar amount or less in the future.
The WHT applies to various transactions, including:
- When people get paid for their work
- Sale or purchase of immovable property
- Imports
- Earning from banks or investments
- Dividends from shares
- Utility bill payments like water and electricity
- Cash withdrawal from bank accounts.
Property Agents Listen Carefully
During the exchange of plot files within private housing schemes nationwide, registered property agents play a vital role in facilitating business transactions between buyers and sellers of immovable properties, effectively bypassing the requirement of withholding taxes. Not anymore!
Many private housing societies engage in tax evasion by concealing actual property transfers, allowing the trading of files to proceed without tax payment.
To combat such practices within private housing schemes, the FBR (Federal Board of Revenue) plans to implement measures in the upcoming budget. These measures aim to document buyers and sellers, ensuring their tax compliance and discouraging tax evasion.
The proposed legal amendments aim to enforce tax payments on private housing societies’ purchase and sale of plot files while ensuring comprehensive documentation of immovable properties.