In a significant ruling for real estate developers and original property sellers, the Lahore High Court’s Rawalpindi Bench has temporarily barred the Federal Board of Revenue (FBR) from demanding advance tax on first-time sales of immovable property.

Justice Jawad Hassan issued an interim order under Section 236C(4)(b) of the Income Tax Ordinance, which exempts first-time sellers, certified as original allottees by the relevant authority, from paying advance tax.

The case was filed by Elite Estates, a prominent housing society along the Islamabad motorway, which challenged the Punjab Land Records Authority’s (PLRA) practice of collecting advance tax through its online portal despite the legal exemption.

Barrister Asad Ladha, representing Elite Estates, argued that no FBR notification authorized PLRA’s tax demands. The court accepted this argument and provisionally allowed Elite Estates to proceed with property transfers to 128 buyers, subject to the submission of post-dated cheques and an undertaking to pay tax if required later.

Legal experts have welcomed the court’s decision, describing it as a positive development for the real estate sector. Meanwhile, the federal government is reportedly considering abolishing the 3% federal excise duty on first-time property sales, citing low revenue generation and legal challenges.

The case is scheduled for further hearing on April 28.