FBR Removes Holding Period Requirement for Property Capital Gains Tax

The Federal Board of Revenue (FBR) has announced a significant change to the property capital gains tax regime. As of July 1, 2024, the holding period requirement for capital gains tax on properties has been removed. This means that all profits derived from the disposal of immovable property in Pakistan will be taxed as capital gains, regardless of the holding period.

Under the new rules, individuals and companies listed on the Active Taxpayers List (ATL) will be taxed at a uniform rate of 15% on property sales. This simplifies the tax structure and eliminates the previous tiered system, which levied taxes based on the holding period. For those not listed on the ATL, taxes will follow Division I in Part I of the First Schedule, with a minimum rate of 15%.

It’s essential to note that this change only applies to properties purchased on or after July 1, 2024. For properties acquired on or before June 30, 2024, the old tax system will still apply, with gains taxed based on the holding period and previous rates. This change aims to streamline the tax process and encourage compliance, but it’s crucial to understand the implications for your specific situation.