The Federal Board of Revenue (FBR) has repealed the holding term requirement for property capital gains tax for properties purchased on or after July 1, 2024, according to press reports. (Lahore, August 2024)

In a recent development, the FBR eliminated all holding term limitations for capital gains tax for properties purchased on or after July 1, 2024.

According to new guidelines described in an FBR income tax circular, all earnings obtained from the disposal of immovable property in Pakistan will now be taxed as capital gains in accordance with the First Schedule.

Previously, rates were paid based on how long a person had their land, with the maximum tax being 15% when a plot was sold before one year ended. This rate decreased over time to reach zero percent for plots left more than six years, houses above four years, and flats beyond two years.

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Beginning July 1, 2024, property sales will be taxed uniformly at a rate of 15% for sellers who are already on the Active Taxpayers List (ATL).

Individuals and associations of persons (AOPs) who are not on the ATL shall pay taxes in accordance with Division I in Part I of the First Schedule. Unlisted corporations will be taxed under Division II of the same schedule. Nonetheless, the minimum rate for people and AOPs will not fall below 15%.

For properties acquired on or before June 30, 2024, the existing tax system will continue to apply, which means gains will be taxed based on the holding period and rates in existence prior to the Finance Act of 2024.

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