FBR revises withholding tax provisions for property, vehicles, and salaries


FBR revenue collection

ISLAMABAD: The Federal Board of Revenue (FBR) has announced changes to withholding tax provisions related to the sale and purchase of immovable property, the purchase of motor vehicles, and salary income.

These changes, effective from 1st July 2024, are detailed in a notification and must be monitored by all Chief Commissioners of Inland Revenue (IR).

For the sale of immovable property under section 236C, the withholding tax (WHT) rates now vary based on the taxpayer’s status as a filer, late filer, or non-filer, and the amount of consideration received.

Filers will pay 3 per cent if the consideration does not exceed Rs50 million, 3.5 per cent if it exceeds Rs50 million, and 4 per cent if it exceeds Rs100 million. Late filers will face increased rates of 6 per cent, 7 per cent, and 8 per cent respectively for these categories. Non-filers will be subject to a flat rate of 10 per cent.

These provisions do not apply to taxpayers who have filed returns on time for the last three tax years.

For the purchase of immovable property under section 136K, similar distinctions apply. Filers will pay 3 per cent, 3.5 per cent, and 4 per cent depending on whether the fair market value does not exceed Rs50 million, is between Rs50 million and Rs100 million, or exceeds Rs100 million.

Late filers will pay 6 per cent, 7 per cent, and 8 per cent, while non-filers will be taxed at 12 per cent, 16 per cent, and 20 per cent for these respective categories.

Regarding the purchase of motor vehicles, section 213B has been updated to differentiate between filers and non-filers based on engine capacity. For filers, the tax rates range from 0.5 per cent for vehicles up to 850cc to 12 per cent for vehicles above 3000cc. For non-filers, the rates range from 1.5 per cent to 36 per cent for the same categories.

For salary income, the WHT rates are structured as follows: 0 per cent for income up to Rs600,000; 5 per cent for income exceeding Rs600,000 but not Rs1,200,000; 15 per cent for income exceeding Rs1,200,000 with a base amount of Rs30,000; 25 per cent for income exceeding Rs2,200,000 with a base amount of Rs180,000; 30 per cent for income exceeding Rs3,200,000 with a base amount of Rs430,000; and 35 per cent for income exceeding Rs4,100,000 with a base amount of Rs700,000.

Sections 236G and 236H have been revised to remove sector-specific provisions, meaning manufacturers, commercial importers, wholesalers, dealers, and distributors must deduct tax regardless of their sector.

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