Significant Increase in Tax Revenue
Tax collection from property transactions has reached Rs 130 billion in the first seven months of the fiscal year 2024-25, marking a 24% increase from the Rs 105 billion collected in the same period last year. The rise is largely attributed to recent policy amendments introduced by the Federal Board of Revenue (FBR) as part of the federal budget for 2024-25, which have expanded the scope of taxation and brought more transactions under the tax net.
Key Policy Changes Driving Growth
Before the Finance Act, 2024, Section 100BA of the Income Tax Ordinance imposed higher withholding tax rates on individuals not listed on the Active Taxpayers’ List (ATL). However, the latest amendments have extended these higher tax rates to individuals who, despite being on the ATL, failed to file their tax returns on time.
As a result, two categories of taxpayers now face increased tax liabilities:
- Those not appearing on the ATL at the time of the transaction.
- Those listed on the ATL but filing returns after the deadline.
Breakdown of Tax Collection Growth
FBR data reveals a notable surge in tax collection from both the sale and purchase of properties:
- Tax collection from property sales increased by 30%, reaching Rs 64 billion in the first seven months of FY25, compared to Rs 49 billion in the same period last year.
- Tax collection from property purchases rose to Rs 66 billion, up from Rs 56 billion in the previous fiscal year.
Improved Compliance and Stricter Enforcement
Experts attribute this rise in tax revenue to stricter enforcement, improved compliance, and enhanced monitoring by tax authorities. The government’s push for greater transparency in real estate transactions and stronger enforcement of tax regulations has also played a crucial role.
Future Outlook
As real estate remains a key investment sector, the FBR is expected to continue tightening regulations to ensure compliance and further boost tax revenues. With these measures in place, Pakistan’s tax collection from property transactions is likely to witness continued growth in the coming months.