FBR to Charge Up to 7% FED on Transfer of Property

The Federal Board of Revenue (FBR) will charge 3 percent Federal Excise Duty (FED) on the allotment or transfer of commercial property and first allotment or first transfer of open plots or residential properties where buyer is appearing on the active taxpayer list (ATL). According to the updated Federal Excise Act 2005 issued on Wednesday, the duty will be applicable on allotment or transfer of commercial property and first allotment or first transfer of open plots or residential property by any developer or builder in such mode and manner and subject to such conditions and restrictions as may be prescribed by the Board Respective headings. The FED would be 3 percent of gross amount of consideration involved where the buyer is appearing on active taxpayer list maintained under section 181A of the Income Tax Ordinance, 2001 on the date of acquisition of property. The duty rate would be 5 percent of gross amount of consideration involved where the buyer has not filed the income tax return by due date as specified in proviso to Rule 1A of Tenth Schedule to the Income Tax Ordinance, 2001. The duty rate would be 7 percent of gross amount of consideration involved where the buyer is not appearing on active taxpayer list maintained under section 181A of the Income Tax Ordinance, 2001 on the date of acquisition of property. The FBR has issued the updated Sales Tax Act, 1990 and Federal Excise Act 2005 up to June 30, 2024, including amendments made in these laws through Finance Act 2024. The revised Federal Excise Act 2005 disclosed that if any retailer is found selling cigarettes packs without affixing, or affixing counterfeited, tax stamps, banderoles, stickers, labels or barcodes, notwithstanding any other provision of this Act, the retail outlet of such person shall be liable to be sealed in the manner as may be prescribed. New Definition of Tax Fraud The updated Sales Tax Act has incorporated new definition of “tax fraud” which means intentionally understating or underpaying the tax liability or overstating the entitlement to tax credit or tax refund in contravention of duties or obligations imposed under this Act by way of submission of false return, statements or false documents or withholding of correct information or documents to cause loss of tax. Under the revised Sales Tax Act, the FBR has established Tax Fraud Investigation Wing-Inland Revenue. The functions of the tax fraud Investigation Wing Inland Revenue shall be to detect, analyze, investigate, combat and prevent tax fraud. The tax fraud Investigation Wing Inland Revenue shall comprise Fraud Intelligence and Analysis Unit, Fraud Investigation Unit, Legal Unit, Accountants Unit, Digital Forensic and Scene of Crime Unit, Administrative Unit or any other Unit as may be notified by the Board through notification in the official Gazette. The updated Sales Tax Act revealed that the Board through notification in the official Gazette, may require any person or class of persons to integrate their electronic invoicing system with the Board’s Computerized System for real time reporting of sales in such mode and manner and from such date as may be specified therein.