In the face of the growing criticism and sharp decline in land and flat registration as well as revenue collection from this vital sector, the National Board of Revenue (NBR) has again revised downward the rate of source tax on land registration.
The revenue board has lowered the source tax rate on some specific lands to 6 per cent from 8 per cent, according to Statutory Regulatory Order (SRO) issued by the NBR on Monday.
The new move is expected to benefit the purchasing lower-end land registrations, but the amount is higher than fixed source tax which remains the same as earlier. In such case, source tax is considered as the new rate.
“The land will be other than commercial land development city authorities of Dhaka, Chattogram and Gazipur, National Housing Authority, Public Works Department and Cantonment Board, or residential lands under the abovementioned entities or commercial lands, not under the control of those entities, but developed by real estate companies,” the SRO reads.
In specific areas such as Gulshan, Banani, Motijheel, and Tejgaon, individuals will be subject to a 6 per cent tax rate or Tk 5 lakh per katha, which is higher if the land is classified as mentioned above.
However, for high-end lands, the tax rate remains at 8 per cent, which may result in higher payments.
Earlier, the NBR changed the method of its tax collection for land registration too.
Under the approach, source tax will be determined based on mauza and types of lands such as residential, commercial, real estate, or land developed by developers.
This marks a shift from the previous system which imposed taxes based on area-wise land classification.
Earlier, taxes on land and flat registration had been doubled, calculated on the deed value, as per the new income tax law enacted by the Jatiya Sangsad in June. This increase had a negative impact on the sector.
Due to higher taxes, land and flat registration witnessed a 30-40 per cent decline in the current fiscal year. The NBR reported a one-third decrease in revenue collection from the sector.
For FY24, NBR has set a Tk 470 crore tax collection target from land and flat sales.