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| Gain Tax and Advance Tax Notification 2022 | 236C and 236K of Income Tax Ordinance |
In the name of ALLAH, the most beneficent, the most
merciful
Gain Tax (236C) by Seller
When an immovable property is required to be transferred, various
fees, taxes etc are paid to the Government in respect of Stamp Duty, Registration
Fee, TIP (Transfer of Immovable Property) Tax, Advance Tax under Section 236
C of Income Tax Ordinance (also known as of Gain Tax or Capital Gain Tax
(CGT) payable by seller and Advance Tax 236K of Income Tax
Ordinance payable by purchaser. Some Fees, Taxes are paid by Sellers of
immovable property and some taxes are paid by Purchasers. Except Gain Tax, all
the expenses with regard to transfer of an immovable property are usually paid
by purchaser. The payment of Gain Tax under section 236 C of Income Tax
Ordinance is the responsibility of Seller.
Let me explain, what section 236c
of Income Tax Ordinance 2001 speaks:-
236-C. Advance Tax on sale or
transfer of immovable Property.—(1) Any person responsible
for registering [,recording] or attesting transfer of any immovable
property shall at the time of registering
[recording] or attesting the transfer shall collect from the seller or
transferor advance tax at the rate specified in Division X of Part IV of
the First Schedule
[:] [Explanation,—For removal
of doubt, it is clarified that the person responsible for registering,
recording or attesting transfer includes person responsible for registering,
recording or attesting transfer for local authority, housing authority, housing
society, co-operative society [, public
and private real estate projects registered/governed under any law, joint
ventures, private commercial concerns] and registrar of properties.]
[Provided that this
sub-section shall not apply to a seller, being the dependant of a
Shaheed belonging to Pakistan Armed Forces or a person who dies while in
the service of the Pakistan Armed Forces or the service of Federal or
Provincial Government, in respect of first sale of immovable property acquired
from or allotted by the Federal Government or Provincial Government or
any authority …..
In short, according to this section, the seller or Transferor of an immovable property is held responsible for payment of Advance Tax under section 236C (Gain Tax). The ratio of payment of gain tax has not been explained in section 236C of Income Tax Ordinance.
Time Period for Gain Tax (236C) in 2022
Earlier, all the sellers of immovable property were not held
responsible to pay gain tax / advance tax under section 236C because there was a
condition imposed in this regard, the condition was that if seller was
transferring property after 5 years or 6 years or 10 years, no gain tax was
applicable to be paid by seller. The time period of selling property and
applicability of gain tax thereon was changed from time to time like 3 years, 4
years, 5 years etc, but currently the condition of time period has been removed
from section 236C, and notification in this regard has also been issued by
Federal Board of Revenue (FBR) on
Government
or
Revenue Division
Federal Board of Revenue
(Directorate General of Withholding Taus)
Inland Revenue
****i
No. 2(2)SA to DG(wth)/2021151390-R
The Secretary,
Board or Revenue,
Subject: Changes In the
income Tax Ordinance, 2001, through Finance Act, 2022- Implementation Reel:
Please refer to subject.
It is brought in your kind
notice that the following changes have been made in respect to section 236C and
236K( of Income Tax Ordinance:, 2001 in through Finance Act, 2022:
A. Section 236C:
a. Removal of time limit from
Section 236C:
Sub
Section (3) of Section 236C has been omitted.
Implication: Tax
under Section 236C shall be collected independent from the time of sale with
respect to time of purchase.
B.
Increase
In Rates of Section 236K for Persons Not Appearing on ATL
Tax
rate for 236K shall be increased by 250% in the case of Non-fliers as per
amendment in Rule 1 of Tenth Schedule of Income Tax Ordinance, 2001.
You
arc requested to kindly ensure that the aforesaid changes are strictly followed
for proper implementation and deduction of WHT accordingly.
(Abdul
Wahid…)
Director General (WHD)
Gain Tax and Advance Tax Notification 2022
Thus, after removal of time period, all the sellers either they are selling property within 1 year of purchasing or 2 years of purchasing or 3 years of purchasing, are responsible to pay Gain Tax.
Gain Tax Rates in 2022
The amendments with regard to ratio of payment of Gain Tax
(236C) have also been made. According to which, the seller who is Filer in FBR,
is held responsible to pay 2% on gross value of property however, the
seller (who is non-filer) is held responsible to pay 5% per gross value
of property.
It is pointed out that earlier, the rate
of gain tax was 1% for filer and 2% for non filers.
Advance Tax (236K) by Purchaser
As the seller of an immovable property is responsible to
pay gain tax / Advance Tax under section 236C of Income Tax Ordinance, in the
same way, besides paying other taxes / fees, the purchaser of an immovable
property is also held responsible to pay Advance Tax under Section 236K of
Income Tax Ordinance.
Section 236-K of Income Tax Ordinance speaks as under:-
236K. Advance tax on purchase or transfer of
immovable property.—
(1) Any person responsible for registering [recording] or attesting transfer of any
immovable property shall at the time of registering [,recording] or attesting
the transfer shall collect from the purchaser or transferee advance tax
at the rate specified in Division XVIII of Part IV of the First Schedule.
[Explanation,—For removal of doubt, it is clarified that
the person responsible for registering, recording or attesting transfer
includes person responsible for registering, recording or attesting transfer
for local authority, housing authority, housing society, co-operative society ,
public and private real estate projects registered/governed under any law,
joint ventures, private commercial concerns] and registrar of properties.]
(2) The advance tax collected under sub-section (1) shall
be adjustable [: Provided that if the buyer or transferee is a non-resident
individual holding a Pakistan Origin Card (POC) or National ID Card for
Overseas Pakistanis (NICOP) or Computerized National ID Card (CNIC) who has
acquired the said immovable property through a Foreign Currency Value Account
(FCVA) or NRP Rupee Value Account (NRVA) maintained with authorized banks in
Pakistan under the foreign exchange regulations issued by the State Bank of
Pakistan, the tax collected under this section from such persons shall be final
discharge of tax liability for such buyer or transferee.]
(3) Any person responsible for collecting payments in
installments for purchase or allotment of any immovable property where the
transfer is to be effected after making payment of all installments, shall at
the time of collecting installments collect from the allotee or transferee
advance tax at the rate specified in Division XVIII of Part IV of the First
Schedule]
Provided that where tax has been collected along with
installments, no further tax under this section shall be collected at the time
of transfer of property in the name of buyer from whom tax has been collected
in installments which is equal to the amount payable in this section.]
From bare reading of section 236K of Income Tax ordinance,
it reveals that the payment of Advance Tax under section 236K is the
responsibility of purchaser of immovable property.
Time Period for Advance Tax
(236K) in 2022
Currently, the payment of
Advance Tax (236K) is not subject to any time period. Hence, all the buyers should
pay Advance Tax (236K) at the time of purchasing an immovable property.
Advance Tax (236K) Rates in 2022
Currently, if the purchaser
is Filer, then he has to pay Advance Tax (236K) @ 2% on gross value of
property. However, if the purchaser is non-filer, then he has to pay 5% of
gross value of property.
It is clarified that before amendments,
the filer had to pay 1% on gross
value of property and non filer had to pay 2% on gross value of
property.