NBR cuts source tax again on land registration

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 again revised the rate of source tax for land registration.

The revenue board lowered source tax rate to 6 per cent from 8 per cent for some specific lands, according a Statutory Regulatory Order (SRO) issued by the NBR on Monday.

The new move is expected to benefit purchasing lower-end land registrations but amount is higher than the fixed source tax – which is remained same as earlier. In that case, the source tax is considered as the new rate.
The land will be other than commercial lands development city authorities of Dhaka, Chattogram and Gazipur, National Housing Authority, Public Works Department and Cantonment Board, or residential lands under the above mentioned entities or commercial lands, not under the control of those entities, but developed by real estate companies, reads the SRO.

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, whichever 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 collection for land registration too.
Under the approach, source tax will be determined based on mauza and land classification 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-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.

As a consequence of the higher taxes, land and flat registration witnessed a decline of 30-40 per cent in this incumbent fiscal year. The NBR reported a one-third decrease in revenue collection from the sector.

For FY24, the NBR has set a tax collection target of Tk 470 crore from land and flat sales.