Tax on purchase or transfer of immovable property
Tax on purchase or transfer of immovable property: Every person responsible for registering, recording or attesting transfer or 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 of three per cent of the amount computed under clause (c) of sub-section (4) of section 111.
For the 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 and registrar of properties. Tax collected under sub-section (5) shall not be adjustable.
The FBR has explained amendment made by Finance Act 2017 in Circular No. -1 of 2017 dated 6.9.2017 as under:
EXPANSION IN SCOPE OF AUTHORITIES LIABLE TO COLLECT TAX ON REAL ESTATE TRANSACTIONS.
Prior to the Finance Act, 2017, the obligation to collect tax under sections 236C, 236K and 236W of the Ordinance lay with any person responsible for registering or attesting transfer of any immovable property.
However, the term registering or attesting transfer was being misinterpreted restrictively as being applicable only to provincial registration authorities.
Tax on purchase or transfer of immovable property
Moreover, certain cooperative societies etc were of the opinion that they are neither responsible for registering nor attesting transfer of immovable properties as they simply transferred allotments Appropriate amendment has been made in accordance with legislative intent through the Finance Act, 2017 whereby the term “registering or attesting transfer” has been extended to also include a person “recording transfer” of such immovable property.
This shall circumvent any attempt to avoid collection of taxes on sale/purchase of immovable property by cooperative societies, authorities etc.
Tax on purchase or transfer of immovable property
In order to elucidate the existing /prevalent law an explanation has also been added in sections 236C. 236K and 236W of the Ordinance whereby a local authority, housing authority, housing society, co-operative society and a registrar of properties has also been specifically clarified to fall within the purview withholding agents obliged to collect tax- under section 236C, 236K and 236W of the Ordinance. Such explanation shall be applicable retrospectively as it merely explains the prevalent law.
