Withholding taxes on sale and purchase of property
Withholding taxes on sale and purchase of property Section 236C, Section 236K
Tax under section 236C is collected from the seller or transfer at the rate of one percent of the gross amount of consideration received. Prior to the Finance Act, 2019, this tax was not collected if the property was held for a period exceeding three years.
Through the Finance Act, 2019, the period of three years has been extended to five years which means that tax under section 236C shall be collected if the immovable property is held for a period up to five years.
Through the Finance Act, 2019, the rate of tax on purchase of immovable property under section 236K has been reduced to 1% from 2%. Prior to the Finance Act, 2019, no tax was collected under section 236K on purchase of property where the value of property was up to Rs.4 million.
Through the Finance Act, 2019, the threshold of Rs. 4 million for collection of tax has been removed. Now tax on purchase of property will be collected on all transactions irrespective of the value of immovable property.