Starting from July 1, 2023, the Federal Board of Revenue (FBR) has initiated the enforcement of revised withholding tax rates pertaining to the buying and selling of immovable properties, as mandated by the Finance Act 2023.
The FBR’s field formations have been actively ensuring the implementation of these updated rates across the entire nation. Notable changes include adjustments to the withholding tax rates under sections 236C (Advance Tax on sale or transfer of immovable Property) and 236K (Advance Tax on purchase or transfer of immovable property).
For individuals who file income tax returns, the withholding tax rate under section 236C (Advance Tax on sale or transfer of immovable Property) has been raised from 2 percent to 3 percent. Meanwhile, non-filers will now be subjected to a higher rate, increased from 4 percent to 6 percent under the same section.
Similarly, for section 236K (Advance Tax on purchase or transfer of immovable property), the withholding tax rate for filers has been increased from 2 percent to 3 percent. On the other hand, non-filers will experience a substantial escalation, with their rate of withholding tax soaring from 7 percent to 10.5 percent.
These alterations in the withholding tax rates have been implemented under the Finance Act 2023, following amendments made to sections 236C and 236K of the Income Tax Ordinance 2001.
According to FBR’s field instructions, under section 236C, the rate of advance tax will stand at 3 percent for filers and 6 percent for non-filers. Under the revamped section 236K, the rate of advance tax will be 3 percent for filers and a considerably higher 10.5 percent for non-filers.
FBR’s field formations have directed the relevant zones to apply these new rates, effective from July 1, 2023.