KARACHI: The government is likely to raise advance tax for non-filers of income tax returns on sale and purchase of properties to 10 percent in the budget 2019/20, The News reported.[the_ad id=”31605″]Presently, the advance tax is applicable at the rate of one percent and two percent on filers and non-filers of income tax returns, respectively on registering, recording or attesting transfer of immovable properties under Section 236C of Income Tax Ordinance, 2001.
Advance tax on purchase of property is, however, zero percent if property value is up to four million rupees. For property value above Rs4 million, the advance tax on purchase of immovable properties is two percent for filers and 4 percent for non-filers under section 236K.
The he government is reportedly considering the increase in advance tax on sale and purchase of properties up to 10 percent for non-filers.
The real estate sector is believed to be the primary parking lot of black money. People were involved in making money on sale and purchase of immovable properties without giving due share to the government in the shape of taxes.
Advance tax rates would be applicable on valuations of immovable properties notified by the Federal Board of Revenue (FBR). A directorate general of immovable properties was established to detect tax evasion in sale and purchase of immovable properties in the last budget through the Finance Act 2018.
However, the advance tax on purchase of immovable properties would be reduced to one percent by abolishing existing rates under Section 236K.
Another Section 236W was introduced into the income tax law to give amnesty to buyers of immovable properties while exempting them from declaring source of investment for purchase of properties. The tax rate under the section is three percent. The section has to be abolished as soon as the directorate is functional.