Property Sector Tax Relief and Updates on Late Filers

The government has announced major tax relief for the property sector, reducing tax rates to encourage real estate activity. Key changes include:

• Section 236C: Withholding tax on property sales reduced from 4% to 2%.
• Section 236K: Advance tax on property purchases cut from 4% to 0.5%.
• Capital Gain Tax Slabs: Adjusted to provide further relief.

These measures aim to revive the real estate market and ease financial burdens. However, a significant issue remains: the taxation of late filers.

The "late filer" category, introduced in July 2024, applies to individuals filing tax returns after the deadline. Late filers face double tax rates on property transactions compared to regular filers. For instance, while a filer pays 3% tax, a late filer pays 6%, and a non-filer pays even more. This has discouraged property transactions, reducing business activity and impacting tax collection.

Stakeholders have raised concerns that this category penalizes genuine taxpayers and slows real estate growth. To address this, the Prime Minister has directed a committee to review the issue and submit proposals by February 2025. Key recommendations under discussion include:

• Eliminating the late filer category.
• Reducing tax rates for late filers to align with regular filers.
• Boosting real estate activity through targeted reforms.

The Federal Board of Revenue (FBR) is expected to announce updates soon. These reforms aim to simplify the tax system, encourage compliance, and revitalize the property sector.

By addressing these challenges, the government seeks to create a fairer tax system while enhancing tax collection and supporting the real estate market. Further updates are anticipated in the coming weeks.

This article was published at Good News for the Property Sector – Tax Relief and Updates on Late Filer Taxation