DHA challenges (FED) federal excise duty on transfer of property: IHC seeks response from FBR
The Islamabad High Court (IHC) has initiated proceedings that could significantly affect the real estate sector in Pakistan. The Defense Housing Authority (DHA) Islamabad has filed a petition challenging the legality of the recently imposed Federal Excise Duty (FED) on transfer of property. The IHC has issued notices to the Federal Board of Revenue (FBR) and the Attorney General of Pakistan seeking their response on this important legal challenge.
Grounds of Dispute:
DHA Islamabad’s petition focuses on enforcement of FED on transfer or allotment of immovable properties by developers and builders. The authority contends that the ban is beyond the purview of the Act based on Table III of the First Schedule of the Federal Excise Act, 2005. A major contention is that the amendment to Schedule III lacks an amendment in line with the charging section of the Act, which defines goods and services. Excise duty
Legal Arguments of DHA:
Legal counsel of DHA Islamabad says that excise duty is applicable only on goods and services. They say that immovable property does not fall into any category. The petition further challenges the inclusion of transfers of property under excise duty, stating that such transactions do not meet the definition of “goods” within the framework of the Federal Excise Act. It challenges directly. The virus (Statutory Authority) of Table III of the First Schedule.
IHC response and next steps:
The IHC, recognizing the importance of a challenge to a federal law, issued notices to the FBR and other respondents to submit their replies. Further, a notice has been issued under Order 27-A of the Civil Procedure Code (CPC). Attorney General of Pakistan To represent the interests of the Federation in the case.
Implications for Real Estate Sector:
The outcome of this case will have far-reaching implications for the real estate sector in Pakistan. A decision against FED enforcement could lead to significant tax refunds for developers and buyers, potentially changing the real estate transaction landscape. Conversely, maintaining the FED could set a precedent for future tax policies.
What to look for:
The IHC’s decision will be closely watched by developers, buyers and legal experts alike. The court’s decision will not only clarify the legal interpretation of the Federal Excise Act, but will also potentially shape future tax policies related to real estate transactions in Pakistan. We will continue to monitor this case and provide updates as they become available.
Reference: https://profit.pakistantoday.com.pk
