LAHORE – Pakistani authorities tightened no0se around real estate sector, leaving industry in dire straits, but those planning to sell property for the first time.
In major relief for property sellers and real estate developers, Lahore High Court’s Rawalpindi Bench restricted Federal Board of Revenue (FBR) from collecting advance tax on people selling property for the first time.
This decision is sigh of relief for those selling property for first time as it reinforces their exemption under Section 236C(4)(b) of Income Tax Ordinance. The exemption applies if seller is original allottee and has been certified by the concerned authority.
LHC passed on relief after a housing society took legal route against Punjab Land Records Authority for charging advance tax through its online system. The court found that PLRA’s actions had no backing from any official notification from apex tax collection authority.
Judge allowed sale of 128 properties on condition that post-dated cheques and written undertakings are provided, in case tax is later deemed payable.
The landmark ruling could boost confidence in the real estate sector and ease financial burdens for genuine sellers. The next court hearing is scheduled for April 28, but for now, this is welcome news for those planning to sell their property for the first time in Pakistan.
Federal Excise Duty On Property
The Pakistani government decided to abolish the 3pc Federal Excise Duty (FED) on the first sale of properties, a move made in consultation with the IMF. This tax, introduced in the previous budget, had faced strong resistance from the real-estate sector and legal challenges, as property taxation is a provincial matter.
FED applied at rates of 3% for filers and 5% for non-filers, and its removal is aimed at reviving the struggling real estate market. A formal proposal has been submitted, and legislation is expected soon. The government also plans to eliminate a 10% income tax surcharge on high earners and offer tax relief to the salaried class, pending IMF approval.
Other tax reforms under consideration include scrapping the deemed income tax on property, standardizing stamp duties, revising property valuations, and offering tax exemptions for affordable housing and first-time buyers.
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