Tax Exemption on Agricultural Property on Sale-Transfer: FBR Announces

In a recent news spared out from the Federal Board of Revenue, the FBR has issued circular number 3 of 2023. Clarifying the application of section 7E on farmhouses. Under this circular, Tax Exemption on Agricultural Lands on Sale-Transfer will be applicable. The tax exemption validates on agricultural property used for farming activities under the provisions of section 7E of the Ordinance. This exemption applies to self-owned agriculture property and excludes farmhouses and associated immovable property constructed on agricultural land.

For cases where immovable property designated as agricultural property (excluding farmhouses) is being sold or transferred, the transferring authority will not require evidence of tax payment under section 7E or the Form-A, as specified in Circular No. 01 of 2023-24.

However, this law does not apply where one or more farmhouses have been construct on agricultural property. Under the conditions outlined in Circular No.1 of 2023-24 released by FBR states tax law will be applicable to those farmhouses. The FBR has declared a farmhouse as a dwelling compound (residential property). In the category of a dwelling unit, it is construct on a minimum area of 2,000 sq.ft yards. With a covered area of at least 5,000 sq.ft. If there are multiple housing or homestead units. Within a covered area and the average unit area exceeds 2,000 square yards per unit. Then each of these dwelling units will be consider a separate farmhouse, according to the FBR’s clarification.

For more information and consultancy on FBR latest tax law developments and amendments, visit online property portal or dial 0304-111-0309. Our property experts will assist you in filling and filing the property case.