Property buyers in Punjab face 5% penalty on non-banking transactions

This penalty adds to the existing tax burden on property transactions
 

Punjab imposes 5% penalty on non-banking transactions

Property buyers and sellers in Punjab, the country’s most populous province, are facing stricter regulations, with a new 5% penalty on property transactions conducted outside of banking channels. This penalty comes as part of ongoing efforts by authorities to clamp down on tax evasion and increase transparency in the real estate market.

According to a recent report, the penalty will apply to property purchases with a market value exceeding Rs 50 lakh or any other assets valued above Rs 1 million if the transaction is completed through non-banking methods, such as cash payments.

 

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This penalty adds to the existing tax burden on property transactions, presenting a new challenge for real estate buyers and sellers who must now comply with these stricter provisions. The penalty will be imposed directly during property transactions conducted outside banking channels.

In a recent meeting, tax authorities expressed concerns over the lack of enforcement of this penalty and instructed field officers to ensure its collection as per the law. This move is part of a broader strategy to reduce non-banking property transactions and enhance accountability within the sector.

Key Tax Changes for Property Transactions:

  • Property Transaction Tax
    Filers: 15%
    Non-filers: 45%
  • Capital Gains Tax (CGT)
    Filers: 15%
    Non-filers: 15-45%, depending on property value
  • Advance Property Tax
    • Up to Rs 50 million: Filers 3%, Non-filers 12%
    • Rs 50 million to Rs 100 million: Filers 3.5%, Non-filers 16%
    • Over Rs 100 million: Filers 4%, Non-filers 20%
  • Non-filer Sellers: 10% regardless of property value
  • Federal Excise Duty (FED):
    5% duty on property transfers or allotments

Source: Daily Pakistan

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