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Advance Tax on Property

advance tax on property

Advance tax on property is applied on selling or purchasing any residential or commercial property. According to the Income Tax Ordinance 2002, the FBR Advance Property Tax is to be paid right after the registration of the property sold/bought. It is also one of the mandatory taxes with a specified percentage applied each year. 

However, the percentage for advance tax is revised with each fiscal year. It is also important to note that non-payment of this tax results in surcharges, so timely payment of advance property tax must be ensured. Now let’s get into the details of advance tax on the sale or purchase of property as per budget 2024-2025, its payment process, and other details. 

Advance Tax on the Sale of Property

Advance Tax on the Sale of Property in Pakistan is governed by Section 236C of the Income Tax Ordinance, 2001. This tax is applicable from/after 1st July, 2024. The advance tax rate on the sale of immovable property is subdivided into the type of taxpayer and the value of the property. here are the details.

Advance Tax on Sale or Transfer of Immovable Property

Value of the PropertyTaxpayers
Filer (Person in ATL)Late-Filer (Person filing returns after the due date)Non-Filer (Person not in ATL)
Upto 50 Million3%6%

10%
50 Million to 100 Million3.5%7%
Above 100 Million4%8%

Advance Tax on the Purchase of Property

Advance tax on the purchase of property is governed by the Section 236K of the Income Tax Ordinance, 2001. This tax is also applicable from/after 1st July 2024. The advance tax rate on the purchase of immoveable property is subdivided as: 

Advance Tax on Purchase of Immovable Property

Value of the PropertyTaxpayers
Filer (Person in ATL)Late-Filer (Person filing returns after the due date)Non-Filer (Person not in ATL)
Upto 50 Million3%6%12%
50 Million to 100 Million3.5%7%16%
Above 100 Million4%8%20%

Applicability of the Advance Property Tax 2024

The Advance Property Tax for the year 2024 is applicable on all kinds of immoveable residential or commercial property soon after the property is booked (after the downpayment), and it is to be paid till the society allocates the plot number or announces the balloting of that respective property.

Previously it was applicable till the actual possession of the plot, however, the government has revised the policy for the year 2024 and made the Advance Property Tax applicable from plot booking till the balloting or plot allocation.

Who Will Pay & Collect Advance Tax on the Property?

The Advance Income Tax on Property is to be paid by the Seller as well as the Buyer of the property. The applicability of the Advance Property tax is mentioned in Section 236C of the Income Tax Ordinance, 2001. 

As for the collection of the Advance Property tax, it is collected by the authorities responsible for registering, or attesting the sale or transfer of immovable property.  

Important Points to Consider While Paying Advance Tax on Property

Following are some of the considerations regarding advance tax on property payment:

  • Advance income tax on the property is paid in advance (before physical possession of the property)
  • advance tax is subject to change as per the rates of your final liability tax rate
  • You can pay advance tax in installments
  • Your annual income may also be one of the factors in calculating your advance tax
  • One should try to consult an experienced tax advisor while paying it to avoid any kind of miscalculations.

Conclusion

The rate of advance income tax on the sale of property in Pakistan in 2024 will have a huge impact on the overall sale and purchase of property across the country. Also, considering the importance paid to these taxes under the recent, budget, the new tax on the property by FBR is a must to be paid while registration or attestation of assets.

Advance Tax on Property

Please feel free to reach out to Makaan Solutions for further assistance and details about Advance Tax on Property. Our 24/7 customer service is always available to help you Choose and Book your dream property.

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1 thought on “Advance Tax on Property”

  1. What about Projects, like investing in a high rise, will advance tax also be applicable when someone books an appartment in a highrise building?

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