The National Board of Revenue (NBR) has slashed source tax on land registration after a two-fold hike in the tax rates in the budget for the fiscal year 2023-24.
The NBR now classifies land into five categories: commercial (general), residential (general), commercial (real estate) and residential (real estate), and other lands in Dhaka, Chattogram, Gazipur, and Narayanganj City Corporations, according to a gazette notification issued Wednesday night.
Previously, lands were of two categories – commercial and residential.
The maximum source tax for general-commercial plots and real estate-developed commercial plots in all mouzas under Gulshan, Banani, Motijheel, and Tejgaon Thana will now be Tk15 lakh, down from Tk20 lakh, or 8% of the deed value.
The second-highest rate will be Tk6 lakh or 8% of the deed value for general-residential plots and real estate-developed residential plots in the same areas of the capital city, while the lowest rate will be Tk5 lakh or 8% of the deed value for other lands within the same areas.
However, land registration in other city corporation areas will maintain the same tax rate of 6%. The source tax is imposed at 4% for municipalities outside district towns and 2% for all mouzas outside municipalities.
In a conversation with The Business Standard, a senior finance ministry official, speaking on the condition of anonymity, explained that the new classification system was introduced to establish a more efficient progressive tax structure.
The official also highlighted that both buyers and sellers of land would benefit from the new system. It not only reduces taxes, ultimately lowering the cost of buying and selling residential land.