After the recent tax increases on buying and selling property, as well as the rise in property values set by the Federal Board of Revenue (FBR), property buyers and sellers now face another challenge: a penalty on transactions made through non-banking channels.
Real estate expert Muhammad Ahsan Malik explained that this issue arises from the Income Tax Ordinance of 2001, which imposes a penalty on property purchases made outside the banking system. Under Section 75A of the ordinance, a 5% penalty is charged if the value of the property exceeds five million rupees or if any other asset involved in the transaction is valued above one million rupees.
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Malik pointed out that this new penalty has created difficulties for both buyers and sellers. He referred to a letter from the Board of Revenue of Punjab, which was sent to various authorities, including the Registrar of Cooperative Societies and the Director General of Punjab Land Records Authority, urging them to ensure the collection of this penalty.
During a recent meeting chaired by the Senior Member of the Board of Revenue, it was noted that the penalty was not being collected by sub-registrars, land record officers, and other officials handling property transactions. As a result, the authorities have now instructed all relevant officials to enforce the penalty in non-banking transactions, with a warning that failing to collect the fee would hold the responsible officer accountable.
