NBR moves to cut taxes on land, flat registration

Tax authorities have moved to reduce the land-and-flat registration taxes following a sharp slide of its revenue collection from this major contributing sector.
The National Board of Revenue (NBR) has found that land and flat owners have refrained themselves from registration of immovable propitiates, as tax has been raised by twofold or 100 per cent in the budget for current fiscal year (FY), 2023-24.
Tax burden has been increased to 265 per cent with the hike, as capital gain tax at a rate of 15 per cent would be imposed on the differences of purchase and sale of land.
For example, if an individual buys a piece of land at Tk 1.0 million and sells it at Tk 80 million, his capital gain would be Tk 79 million, and he would have to pay tax at a rate of 15 per cent on the amount.
Previously, land and flat registration tax was 4.0 per cent on the deed value that has been raised to 8.0 per cent in FY 2023-24.
Following the fiscal measure, land and flat registration has declined by 30-40 per cent in the months of July and August.
Purchase and sale of land is now one of the major sources of black money creation, as neither buyers nor sellers show real land values in their purchase documents.
The sub-registry offices also expressed concerns over the tax revenue collection fall due to tax hike as well as complexities to collect the NBR-prescribed area-wise tax, officials said.
A sub-registrar, preferring anonymity, said the tax authority has fixed taxes at various rates defining some areas, which are absent in the land survey record.
Such as, the land survey record does not have any area like Sayedabad and Gulshan, as those are under the jurisdiction of Dongara and Ranabhola mouza respectively. The sub-registrars would not be able to collect proper amount of tax from the areas due to not having such names in their records.
Also, tax rates of commercial and residential areas are different in the income tax department's statutory regulatory order (SRO), but the sub-registrars may face difficulties to define the areas in the mouza, he added.
For addressing these issues, the NBR's Income Tax Wing held a meeting with the sub-registrars of Dhaka, Narayanganj, Gazipur, Demra, Chattogram and some other areas on Wednesday to take further actions.
A senior NBR official said they are trying to get a real picture of land and flat registration after imposition of higher taxes.
He opined that there might be a syndicate working against hike of taxes - although the government has long been deprived of the actual amount of revenue from land and flat transactions.
"Usually, people who purchase lands or flats try to register those as soon as possible to take ownership from developers."
But a vested quarter might be active to discourage the land and flat owners to press the government for slashing the taxes, he added.
The field-level income tax officials have also found the sharp hike in land and flat registration tax as a regressive measure.
The registration tax is collected at source at the time of buy and sell. It was considered 'finally paid tax' on the amount.
In the current FY budget, the government has made it a 'minimum tax', which would impose higher tax burden on people of marginal income group.
Officials said the tax deducted from land and flat registration would not be carried forward or ineligible for refund claim of excess tax from this year.
In a short survey, the NBR has found collection of only Tk 320 million land tax in this July from 17 sub-registrar offices near Dhaka. However, the NBR collected Tk 1.01 billion taxes in July 2022.
The NBR has set Tk 47 billion tax collection target from land and flat sale.

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