Taxes to be paid by buyer and seller

Taxes to be paid by buyer and seller

Property taxes were increased in the annual budget 2016-17. Property valuation mechanism was also described in the budget. But, Realtors totally rejected the new property valuation system and taxes as being too harsh. After 10 days of discussion between FBR, Government and Realtors a consensus has been reached according to which property will be evaluated by FBR.

Recently FBR has issued the new immovable property valuation tables. All taxes are now to be paid according to the new property values set by FBR. Here are the details of the taxes to be paid by the buyers and sellers.

Taxes to be paid by the buyer

Buyer has to pay the registry fee, stamp duty, capital value tax and withholding tax. Properties of worth less than 3 million PKR are exempt from withholding tax.

Buyer – Filer

Corporation tax / Town Tax or Registry Fee = 1%

Stamp Duty = 3%

Capital Value Tax =2%

Withholding Tax = 2%

Total tax to be paid by buyer who is filer = 8%

Buyer – Non Filer

Corporation tax / Town Tax or Registry Fee = 1%

Stamp Duty = 3%

Capital Value Tax =2%

Withholding Tax = 4%

Total tax to be paid by buyer who is filer = 10%

(The above mentioned rates are only for Punjab. For other provinces please consult the registration authorities).

Taxes to be paid by the seller

Seller pays the withholding tax and capital gain tax.

Seller – Filer

Withholding Tax = 1%

Capital Gain Tax as;

10% CGT on sale of properties within 1 year of purchase

7.5% CGT on sale of properties within 2 years of purchase

5% CGT on sale of properties within 3 years of purchase

0% CGT on sale of properties after 3 years of holding period

Seller – Non Filer

Withholding Tax = 2%

Capital Gain Tax as;

10% CGT on sale of properties within 1 year of purchase

7.5% CGT on sale of properties within 2 years of purchase

5% CGT on sale of properties within 3 years of purchase

0% CGT on sale of properties after 3 years of holding period

FBR explains with example that how WHT & CGT will be calculated