KARACHI: The Federal Board of Revenue (FBR) has notified that builders and developers would pay advance tax at the rate of 5.0 percent of the tax liability at the time of approval of land development plan or building construction plan.
FBR has notified another chapter regarding computation and collection of tax under section 7C and 7D under the Rules notified earlier.
Federal Board of Revenue (FBR) has barred builders and developers from adjusting withholding income tax against any other head during the year to the extent of activities which falls under the final tax regime.
Under the new rules, every authority shall, at the time of approval of a land development plan or of a building construction plan and before issuing final approval, collect advance tax at the rate of five percent of the tax liability from a builder or a developer as the case may be.
According to the rules, every builder after obtaining approval of a building plan or a revised building plan from the authority and NOC to sell, shall furnish online a copy of building plan and evidence of partial payment of five percent tax to the chief commissioner along with computation of final tax liability on the basis of covered area as per rates provided in the ordinance. The chief commissioner shall, after being satisfied that the rates are applied correctly and after making such inquiry as he thinks fit within 15 days, shall online issue a schedule of advance tax installment to be paid by builder. In case of land developers the duration of payment of tax shall commence from the date of issuance of NOC to sell till the date of completion development project. In case the developer opts to pay lump sum the rules will not apply.