FBR to Charge Up to 15% Tax on Profit on Development and Sale of Property

The Federal Board of Revenue (FBR) has shared details on the collection of taxes on earnings from real estate developers and other sources as specified in the 2024-25 budget. According to the amended Income tax circular No.1 of FY25, taxable profits are now defined as: These requirements apply solely to construction and sale activities for buildings and plots. Other types of income or revenue are not affected. Builders and developers can claim credit up to the amount of taxable profit under Section 7F when explaining the source of credited amounts or investments. Credits exceeding taxable profit are allowed only if taxable income under Section 9 surpasses the taxable profit, with tax paid at the rates in Division I or II of Part I of the First Schedule. Meanwhile, exemptions to 7F include builders and developers established by an Act of Parliament, a Provincial Assembly, or a Presidential Order for employee benefits or specific housing projects. Also, advance tax for a quarter will be calculated by applying the rates from Division I or II of Part I of the First Schedule to the quarterly taxable profit.