The Federal Board of Revenue (FBR) has agreed in principle to abolish the federal excise duty (FED) on the transfer of plots and commercial property.
The FED was imposed last fiscal year through the Finance Act 2024.
Details of the issue reveal that the taxation measure failed to achieve the desired results during the first six months of 2024-25. So far, the revenue generated through this measure has been negligible.
The FBR will propose to the government to abolish the FED on the allotment or transfer of commercial properties and the first allotment or first transfer of open plots or residential properties.
At present, every developer or builder, at the time of allotment or transfer of commercial property and the first allotment or first transfer of open plots or residential property, is required to collect duty at the following rates:
- Three percent of the gross amount of consideration involved, where the buyer is listed on the active taxpayers’ list (ATL).
- Five percent of the gross amount of consideration involved, where the buyer has not filed an income tax return.
- Seven percent of the gross amount of consideration involved, where the buyer is not listed on the ATL.
The duty collected by the developer or builder must be credited to the federal government on the same day. However, there is no mechanism to verify whether the deducted amount has been deposited by the developer or builder into the national treasury.
