New Tax Rules Create Confusion Over Heba Registration

The government has made tax payment mandatory before the registration of property transfers. However, ambiguities in the new Income Tax Act and related regulations regarding tax obligations on ‘Heba’ or gift deeds have created confusion at the field level. As a result, the registration of land and apartment deeds involving such transfers has been suspended. Officials at sub-registrar offices say the current law contains unclear provisions regarding tax collection.

Under a Heba deed, a property owner may transfer property to heirs or other individuals. According to the Transfer of Property Act, 1882, Heba refers to the voluntary transfer of movable or immovable property to another person without any consideration. Such transfers do not involve commercial transactions and are regarded as part of family and religious customs as well as mutual goodwill.

Thakurgaon District Registrar Rezaul Karim told Agamir Somoy that the government amended Section 125 of the Income Tax Act through the Finance Act 2026 and simultaneously issued the Income Tax Rules 2026. Under the new provisions, parties must submit proof of payment of the prescribed tax before registering any property deed for which registration is mandatory. Registration officials will not process deeds without a copy of the e-challan or pay order showing tax payment.

Previously, only gift tax applied to property transferred through Heba or gift deeds, and registration officials collected tax accordingly. However, the new rules contain ambiguities. It remains unclear whether both gift tax and withholding tax will apply or whether only one of them is payable. As a result, registration activities related to such transfers have been temporarily halted, Rezaul Karim added.

The wording of Section 125 of the Income Tax Act and the Income Tax Rules regarding Heba and gift deeds has led many to believe that, in addition to gift tax, a minimum withholding tax of 2 percent or Tk 500 per decimal of land must also be paid. In city corporation areas, the rate is even higher, requiring payment of 5 percent of the land value or Tk 900,000 as withholding tax.

However, sources at the National Board of Revenue (NBR) said withholding tax will not apply to Heba and gift deeds. Property owners will only need to pay the applicable gift tax as required by law. The confusion stems from unclear wording in the regulations, and the NBR is expected to issue a clarification soon.

Under the new rules, parties must deposit the prescribed tax for property transfers into the government treasury through a separate e-challan before registration. They must then submit proof of payment along with the registration application.

The regulations also set tax rates based on the location, classification, and type of property. Existing provisions requiring payment of taxes at prescribed rates for the transfer of land and apartments remain in force.

Tax experts say Heba and gift transfers are part of family and religious traditions. They warn that uncertainty over the application of withholding tax to such deeds could create confusion among the public. They therefore stress the need for the NBR to issue a clarification without delay.