The Federal Board of Revenue (FBR) has announced an increase in tax rates on bank cash withdrawals and property transactions, aiming to strengthen tax compliance and enhance revenue collection from individuals not listed as active taxpayers.
Higher Tax on Bank Withdrawals for Non-Filers
Under the revised policy, non-filers will now face a higher tax deduction on cash withdrawals exceeding Rs 50,000 in a single day. The new rate has been set at 0.8%, up from the previous 0.6% for the same withdrawal threshold.
All banking institutions have been instructed to deduct this advance adjustable tax directly from the accounts of non-filers, ensuring immediate implementation. The move is designed to encourage more individuals to file their tax returns and join the active taxpayer list to avoid higher deduction rates.
Changes to Property Transaction Taxes
Significant amendments have also been made to the advance tax rates on the purchase, sale, and transfer of immovable property under Sections 236C and 236K of the Income Tax Ordinance.
For property buyers:
- Up to Rs 50 million: Tax rate increased from 3% to 1.5% (likely reflecting a restructuring for relief in certain brackets)
- Up to Rs 100 million: Tax rate reduced from 3.5% to 2%
- Above Rs 100 million: Tax rate reduced from 4% to 2.5%
For property sellers or transferors:
- Tax rate increased by 1.5%, with the adjustments aimed at capturing more revenue from capital gains on property sales.
These changes are intended to strike a balance, providing relief to genuine property buyers while ensuring fair taxation on capital gains from property sales.
Balancing Revenue and Market Activity
According to the FBR, the revised tax structure is designed to maintain steady revenue inflows without placing an undue burden on genuine investors and property purchasers. By lowering rates in certain high-value transaction brackets while increasing them in others, the government hopes to make the real estate market more transparent and encourage tax compliance.
Industry experts believe the changes may stimulate activity in the property market by reducing costs for larger transactions while deterring speculative buying and selling that avoids taxation. Meanwhile, the increased tax on bank withdrawals for non-filers serves as a direct incentive for individuals to become compliant taxpayers.
The updated tax measures are part of the government’s broader fiscal strategy to expand the tax net, curb undocumented economic activity, and boost overall revenue for public development programs.
