The Federal Board of Revenue (FBR) has issued a new excise duty on property purchases for developers and builders, according to a report by Express News. The changes, formalized through a notification on Thursday, amend the Federal Excise Rules 2005.
The notification provides a detailed definition of a developer, describing it as an entity that transforms land into residential or commercial plots for sale. This category includes housing societies, cooperative societies, development authorities, and any other organizations engaged in land development and the subsequent sale of these plots.
Under the new rules, developers and builders are required to collect a 3% duty on the gross amount during the allotment or transfer of commercial property or the first allotment or transfer of open plots or residential properties. This rate applies if the buyer is listed as an active taxpayer on the date of acquisition. However, if the buyer has failed to file an income tax return on time, the duty rate increases to 5%. For buyers not on the active taxpayer list, the rate rises to 7%.
The collected duty must be remitted to the federal government on the same day through a CPR or SWAPS payment receipt, as specified in Form A. The FBR has also introduced specific forms for duty payment on properties, requiring developers and builders to submit monthly statements to the relevant FBR commissioner using Form B.
In cases of shortfall or delayed payment, the inland revenue officer assigned to the developer or builder will be responsible for collecting the unpaid duty along with any applicable default surcharges, covering the period from when the duty was initially due.
This move by the FBR aims to streamline the duty collection process and ensure compliance from developers and builders across the country.
