Question:
I am selling my flat. I want to know the details about the qho is going to pay the amount to get this transferred to the buyer’s name? Does buyer and seller both have to pay this amount? Someone said to me that both buyer and seller pay the tax which is 3% in case of filer and 6% in case of non filer.
Answer:
In Pakistan, the tax percentages applicable to the sale of property are determined by the Income Tax Ordinance, 2001. Recent amendments, particularly those outlined in the Finance Act of 2024, have introduced changes in how capital gains on immovable property are taxed, based on holding period and Active Taxpayer List ATL status.
Current Tax Rates on Immovable Property
As per Division VIII of Part I of the First Schedule of the Income Tax Ordinance, 2001 as amended by the Finance Act, 2024, the tax rates applicable on capital gains from the disposal of immovable properties vary based on two key factors:
- Holding Period: How long the property has been held by the seller.
- ATL Status: Whether the seller is on the Active Taxpayers List (ATL).
Here’s a breakdown of the tax rates:
Properties Acquired On or After July 1, 2024 (For Persons on the ATL)
| Holding Period | Open Plots | Constructed Property | Flats |
|---|---|---|---|
| Does not exceed one year | 15% | 15% | 15% |
| Exceeds one year but does not exceed two years | 12.5% | 10% | 7.5% |
| Exceeds two years but does not exceed three years | 10% | 7.5% | 0 |
| Exceeds three years but does not exceed four years | 7.5% | 5% | — |
| Exceeds four years but does not exceed five years | 5% | 0 | — |
| Exceeds five years but does not exceed six years | 2.5% | — | — |
| Exceeds six years | 0 | — | — |
Properties Acquired On or After July 1, 2024 (For Persons NOT on the ATL)
For individuals and associations of persons not appearing on the Active Taxpayers’ List the tax rates will be as specified in Division I for individuals and association of persons and Division II for companies of Part I of the First Schedule. Furthermore, for individuals and associations of persons not appearing on the ATL, the tax rate shall not be less than 15% in any case.
Conclusion
The latest tax rates on the sale of plots depend on the holding period and whether the seller is an active taxpayer. For those on the ATL, rates range from 0% to 15% based on how long the property was held. For those not on the ATL, standard income tax rates apply, with rates not being below than 15 percent.