In the face of growing controversy and a significant decline in land and flat registration, as well as revenue collection from this pivotal sector, the National Board of Revenue (NBR) has revised the rate of source tax and changed the method of its collection for land registration.
Under the new approach, source tax will be determined based on mauza and land classification such as residential, commercial, real estate, or land developed by developers, as outlined in a Statutory Regulatory Order (SRO) issued by the NBR on Tuesday.
This marks a shift from the previous system, which imposed taxes based on area-based land classification.
Earlier, land and flat registration taxes had been doubled, calculated on the deed value, as part of the new income tax law enacted by the Jatiya Sangsad in June. This increase had a negative impact on the sector.
The shift to mauza-based taxation is expected to benefit individuals purchasing lower-end land registrations. However, for high-end lands, the tax rate remains at 8 per cent, which may result in higher payments compared to the previous system.
In specific areas such as Gulshan, Banani, Motijheel, and Tejgaon, individuals will be subject to an 8 per cent tax rate or up to Tk 15 lakh per katha, whichever is higher, based on land classification. This represents a change from the previous rate of 8 per cent or Tk 20 lakh per katha, whichever was higher.
As a consequence of the higher taxes, land and flat registration witnessed a decline of 30-40 per cent in the months of July and August. The NBR reported a one-third decrease in revenue collection from the sector.
The NBR has also reduced the source tax in other mauza areas in Dhaka, Narayanganj, Gazipur, and Chattogram.
In July, the NBR collected only Tk 32 crore in land taxes from 17 sub-registrar’s offices near Dhaka, compared to Tk 101 crore in the same corresponding month in 2022.
For FY24, the NBR has set a tax collection target of Tk 470 crore from land and flat sales.
