FBR to Impose Up to 15% Tax on Property Development and Sale Profits
The Federal Board of Revenue (FBR) has outlined tax collection details for real estate developers and other sources as specified in the 2024-25 budget.
According to the amended Income Tax Circular No.1 of FY25, taxable profits are defined as:
- 10% of gross receipts from the construction and sale of residential, commercial, or other buildings.
- 15% of gross receipts from the development and sale of residential, commercial, or other plots.
- 12% of gross receipts if both construction and development activities are involved.
These requirements only apply to construction and sale activities for buildings and plots. Other types of income are not affected.
Builders and developers can claim credit up to the amount of taxable profit under Section 7F for the source of credited amounts or investments. Credits exceeding taxable profit are allowed only if taxable income under Section 9 surpasses the taxable profit, with tax paid at the rates in Division I or II of Part I of the First Schedule.
Exemptions to Section 7F include builders and developers established by an Act of Parliament, a Provincial Assembly, or a Presidential Order for employee benefits or specific housing projects.
Advance tax for a quarter will be calculated by applying the rates from Division I or II of Part I of the First Schedule to the quarterly taxable profit.
