ISLAMABAD: The Cabinet will soon abolish 3 to 7 percent Federal Excise Duty (FED), levied through the Finance Act, 2024, on transfer of plots and commercial property, to facilitate the real estate sector.
Senior Federal Board of Revenue (FBR) officials told media here on Wednesday that the Prime Minister Shehbaz Sharif has already approved abolition of the FED on property transactions. The FBR has also moved a summary to the federal cabinet in this regard.
The government has two options to issue a Presidential Ordinance or present a Bill in the Parliament for withdrawal of the Federal Excise Duty (FED) on property transactions.
Govt set to scrap federal excise duty on property to boost real estate
According to sources, there is a strong likelihood that the government will move a Bill in the Parliament to immediate abolish the said duty.
At the same time, the Computerized Payment Receipt (CPR-FE) for payment of 3-7 FED would also be withdrawn on allotment or transfer of commercial properties and first allotment or first transfer of open plots or residential properties.
It is learnt that the said taxation measure failed to achieve the desired result during the first six months of 2024-25. So far, the revenue generated through the said measure is negligible. The government will shortly abolish FED on allotment or transfer of commercial properties and first allotment or first transfer of open plots or residential properties, sources added.
The FBR had notified two forms Form-A and Form-B. The Form-A is related to the Computerized Payment Receipt (CPR-FE) and Form-B deals with the details of the payment of FED on property including name of buyer, location of property/area, consideration received and FED rate/FED paid etc.
Presently, every developer or builder at the time of allotment or transfer of commercial property and first allotment or first transfer of open plots or residential property shall collect duty at the rate of 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 on the date of acquisition of the property.
The FED is 5 percent of the gross amount of consideration involved where the buyer has not filed the income tax return by due date as specified in proviso to rule IA of Tenth Schedule to the Ordinance.
The FED is 7 percent of the gross amount of consideration involved where the buyer is not appearing on active taxpayer list maintained under section 181A of the Ordinance, on the date of acquisition of the property.
Copyright Business Recorder, 2025
Comments