NA Finance Sub-Committee Defers New Property Tax Law

The Sub-Committee of the Standing Committee on Finance and Revenue on Tuesday recommended deferring the Standing Committee’s consideration of the proposed new Section 114C of the proposed Tax Laws (Amendment) Bill 2024 until the Federal Board of Revenue (FBR) finalizes the necessary technological changes in its online systems/apps. The sub-committee under the chairmanship of MNA Bilal Azhar Kayani ruled that FBR should provide a demonstration of the updated online system/application to the Standing Committee. Until then, the new tax law for documenting and ensuring tax compliance in the property sector will stay deferred. Pertinently, the amendment is for ensuring that only tax filers with sufficient declared resources can purchase real estate. Concerns were raised over the potential capital flight due to stricter measures, but officials remained optimistic that a new FBR app would streamline property transactions. The FBR has committed to providing a demonstration to the Standing Committee. One option regarding the timing is to reconsider this section as part of the budget process in June 2025. The committee said FBR may focus on preparing the necessary technological changes, ensure maximum user-friendliness and facilitation for taxpayers/users, and mitigate any unintended glitches. The committee decided that in section 114C, in clause (1) (b) the word “Board” be replaced with the word “Federal Government”. The Federal Government may determine the value threshold for transactions affected by this restriction to ensure that property transactions conducted by common citizens and the lower and middle-income class—particularly first-time property buyers or those purchasing their primary residential property—are not impacted. As part of the review, the sub-committee introduced several key revisions to the bill, refining the definitions of “eligible persons,” “immediate family members,” and “sufficient resources” for property transactions. The revised definitions now state: The sub-committee chairman added that 95 percent of real estate transactions involved properties worth less than Rs. 5 million, while 97 percent of deals last year were under Rs. 10 million. He suggested that property buyers, especially first-time homebuyers, should not be overburdened with documentation requirements. The sub-committee also proposed allowing non-filers to purchase property under specific conditions.