LAHORE: For the sale and purchase of real estate in Punjab, new tax rates have been put into effect as a result of a directive from the Punjab Land Records Authority (PLRA) to all revenue officers to look into tax collection from both purchasers and sellers. Implement based Punjab Unveils New Tax Rates for Property Transactions.
The move by the Punjab Land Records Authority comes in response to the amendments introduced by the Finance Act, 2023, which include adjustments in income tax rates and relevant provisions of Sections 236C and 236K of the Income Tax Ordinance 2001.
Under the earlier tax regime, property transactions were levied at a tax rate of 2 percent for filers and 4 percent for non-filers under Section 236C. However, the revised rates now set a tax rate of 3 percent for filers and 6 percent for non-filers on sale, transfer and disposal of properties.
Similarly, section 236K, which deals with purchase of property, has also been amended. Earlier, filers had to pay 3% tax while non-filers were taxed at 7%. The new rules maintain the 3 percent tax rate for filers while increasing the tax rate for non-filers to 10.5 percent on real estate purchases.
The changes came into effect on July 1, 2023, and are designed to streamline the tax process associated with property transactions. However, failure to comply with the revised tax rates and provisions may result in legal consequences, as any discrepancies identified through scrutiny from the authorities will be transferred to the Federal Board of Revenue (FBR). The recovery option is available.
An official of the Board of Revenue Punjab told PROFIT that the aim of these adjustments is to align the tax rates with the current economic realities and ensure that revenue collection remains efficient and equitable.
He said, “These changes reflect the government’s ongoing efforts to enhance revenue generation and ensure a fair taxation system in the real estate sector. The new tax rates will play an important role in shaping property transactions across Punjab and is expected to have a significant impact on the local real estate market.”