ISLAMABAD: The Federal Board of Revenue (FBR) has notified procedures for developers and builders to collect and pay duty on allotments and transfers of property.

The FBR has also issued the Computerised Payment Receipt (CPR-FE) for payment of Federal Excise Duty (FED) through a notification SRO1376 of 2024 issued on Thursday. The amendments were made to the Federal Excise Rules 2005.

Through the notification, the FBR defined a developer as someone who develops land for conversion into residential or commercial plots and then sells it. This will include a housing society, a cooperative society, a development authority, or another entity that develops land for conversion into residential or commercial plots and then sells them.

Similarly, a builder constructs residential or commercial buildings for sale, including a housing society, a cooperative society, a development authority, or another institution that engages in the same construction activity.

According to the duty collection procedure, every developer or builder must collect duty at the rate of 3 per cent of the gross amount of consideration involved at the time of allotment or transfer of commercial property, as well as the first allotment or transfer of open plots or residential property, if the buyer is on the active taxpayer list on the date of acquisition.

If the buyer fails to file an income tax return by the due date, the duty rate will be 5pc of the gross amount of consideration. The rate is 7pc of the gross amount of consideration involved if the buyer is off the active taxpayer list maintained on the property’s acquisition date.

The duty collected by the developer or builder must be credited to the federal government on the same day using a computerised payment receipt (CPR) or SWAPS payment receipt (SPR), as specified in Form A. The developer or builder will submit a monthly statement to the commissioner as per Form B.

If the duty is not paid or is paid too little by the developer or builder to the federal government, the officer in charge of inland revenue for that developer or builder under the Act will go ahead and collect the amount of duty that was not paid or was paid too little, along with the default surcharge on that duty that was not paid or was paid too little for the period starting from the date the duty was due and ending on the date it was paid.

Where at the time of recovery of duty, it is established that the duty that was to be collected from a person has meanwhile been paid by that person, no recovery will be made from the developer or builder, who had failed to collect the duty but the developer or builder will be liable to pay the default surcharge at the rate from the date person failed to collect the duty to the date the duty was paid, according to the procedures.

Published in Dawn, September 6th, 2024