In a key move for real estate developers and original property sellers, the Lahore High Court’s Rawalpindi Bench has restrained 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 clearly exempts first-time sellers from paying advance tax, provided they are original allottees certified by the relevant authority.
The case was brought by Elite Estates, a prominent housing society located along the Islamabad motorway. The petitioner argued that the Punjab Land Records Authority (PLRA) was illegally seeking advance tax through its online portal, despite the legal exemption.
Barrister Asad Ladha, representing the petitioner, said no FBR notification supported PLRA’s demands. The court accepted the argument and provisionally allowed Elite Estates to continue property transfers to 128 buyers—on the condition of submitting post-dated cheques and an undertaking to pay tax if eventually required.
Legal experts welcomed the order, calling it a boost for real estate. The federal government is also reportedly considering scrapping the 3% federal excise duty on first-time property sales, citing low revenue and legal concerns. The matter will be heard again on April 28.
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