The Federal Board of Revenue (FBR) in an explanatory notification has clarified the new taxation system for selling open plots and constructed properties under the Finance Act 2019.

In its notification dated July 30, 2019, the revenue watchdog has exempted tax on annual property rent income (gross) valued at Rs0.2 million and under.

“Through the Finance Act 2019, bracket at serial No. 5 is restricted to gross rent up to Rs.4,000,000 and beyond that, three new brackets of gross rent exceeding Rs.4 million have been introduced with rate of tax at 25%, 30% and 35%,” it said.

The holding period for taxation of capital gain of open plots has been increased to eight years and for constructed properties, to four years.

The type of immovable property, whether an open plot or constructed, will be determined at the time of sale of the property, the notification added.