KARACHI: The government has allowed whitening of money investment in immovable properties at nominal income tax rate of 1.5 percent on declaration made by June 30, 2019.
The federal cabinet approved tax amnesty scheme 2019 for undeclared domestic and foreign assets, which was also promulgated through presidential ordinance.
The government allowed undeclared immovable properties at only 1.5 percent subject to higher valuation notified by Federal Board of Revenue (FBR).
Under the latest scheme a person having purchased immovable properties from black money has been allowed to whiten at 50 percent higher valuation as notified by the FBR.
For example if a person purchased an immovable property and its notified FBR value is Rs1 million then the person can pay 1.5 percent tax on value of Rs1.5 million.
It is interesting to note that the immunity is already available to purchaser of immovable property under Income Tax Ordinance, 2001 by paying 3 percent of withholding tax as per FBR valuation table.
As per the presidential ordinance for implementing Amnesty Scheme 2019, the valuation of assets in case of immovable properties shall be the price not less than:
i. 150 percent of the FBR value notified under sub-section 4 of Section 68 of the Income Tax Ordinance, 2001; or
ii. 150 percent of District Collector (DC) value, where FBR value has not been notified or the FBR value is less than the DC value; or
iii. 150 percent of FBR value notified under Sub-Section 4 of Section 68 of Income Tax Ordinance, 2001 for land and 150 percent of DC vale for constructed property, where FBR value has not been notified for constructed property.
The FBR in February 2019 enhanced the valuation of immovable properties by 20 percent across the country. Although the valuation were much lower than the fair market value and enhancing valuation by 50 percent for the purpose of whitening the money was not justified.
Sources in FBR said that the government had allowed sufficient ground for tax evaders to declare more money under the scheme by paying less amount of tax.