Karachi, October 3, 2023 – The Federal Board of Revenue (FBR) in Pakistan has taken a significant step in its ongoing efforts to combat tax evasion by obtaining comprehensive data of property buyers from relevant authorities.
Official sources have revealed that the FBR has successfully acquired data on property purchasers from provincial registration authorities, housing societies, and cooperative societies. This move is aimed at identifying and cracking down on tax evaders, particularly those suspected of channeling black money into the property sector.
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The FBR’s concern over the substantial amount of undeclared income invested in property prompted the introduction of Section 236 K of the Income Tax Ordinance, 2001. This section allows the FBR to collect withholding tax on the purchase of immovable property. However, it has been observed that some individuals prefer to pay the withholding tax rather than declare the actual amount involved in property transactions.
To address this issue and encourage greater transparency, the FBR has imposed additional tax burdens on individuals who are not on the Active Taxpayers List (ATL). These individuals may now face withholding tax charges of up to 10.5 percent of the property’s value.
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Despite these measures, it has been reported that many property buyers still underreport the value of their properties during the registration process with provincial authorities, resulting in lower withholding tax payments.
FBR sources have stated that the department is actively scrutinizing property transactions, payment methods, and assessing the fair market value of properties. Officials are also gathering details of bank accounts as proof of payment, as well as scrutinizing bank account information of family members and relatives to uncover any additional financial transactions related to property transactions.
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This initiative by the FBR signifies a concerted effort to clamp down on tax evasion within the real estate sector and to ensure that individuals pay their fair share of taxes. By leveraging data from property transactions and financial records, the FBR aims to promote greater transparency and accountability in Pakistan’s property market while increasing tax revenue for the government.
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