The Lahore High Court has given big relief to people selling property for the first time. The court has stopped the Federal Board of Revenue (FBR) from collecting advance tax from those who are selling a property they got directly from a housing scheme (also called “original allottees”).
This case was filed by Elite Estates, a housing society based in Islamabad. They said that they were trying to transfer plots to buyers who were selling their properties for the first time. But the Punjab Land Records Authority (PLRA) system didn’t allow them to do it unless they paid an advance tax under Section 236C of the Income Tax Ordinance.
According to Section 236C(4)(b), people who sell their property for the first time after receiving it directly from a housing society do not need to pay this advance tax. However, the PLRA system was still asking for it, causing problems for the society and the plot holders.
Elite Estates said they had 128 customers waiting for their plots to be transferred, but due to this tax issue, the process had stopped. Their lawyer explained that the FBR was not following its own rules, and there was no law requiring this tax for first time sellers.
The court agreed that the original allottees should not be forced to pay the advance tax. It allowed the property transfers to go ahead and said the buyers only need to give post dated cheques and a written promise that they will pay the tax later, if the final court decision requires them to do so.
This court order is important because it affects many people who invest in property. First time sellers were facing difficulties due to unclear tax policies. Now, they have a temporary solution that gives them some relief.
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In addition, the federal government is also thinking about ending the 3% federal excise duty on the first sale of property. This was recommended by the Prime Minister’s Task Force on Housing. The aim is to reduce costs and make real estate investment easier for people, especially those buying or selling for the first time.
Real estate experts say this court decision will help the property market. It gives people more confidence to invest in plots or houses, knowing that the law protects first time sellers from extra taxes.
This is a positive step toward making the process of property buying and selling smoother and more affordable for ordinary people. It also encourages housing societies to complete property transfers without unnecessary delays.
