Faceless audit system to target mismatches in income and expenditure as tax authorities move against concealed high-value property deals.
ISLAMABAD: The Federal Board of Revenue (FBR) has intensified its scrutiny of undisclosed property transactions after identifying widespread under-reporting of high-value real estate deals in annual tax declarations.
According to official sources, the national tax authority is preparing a major crackdown on individuals who failed to disclose high-value property transactions in their income tax returns, despite engaging in significant real estate activities.
Officials revealed that nearly 80 per cent of the highest-value property transactions were not declared in annual tax returns, highlighting a substantial gap between actual investment activity and reported income.
The sources further disclosed that around 9,000 individuals holding bank deposits worth approximately Rs750 billion reported zero taxable income. Additionally, 98.9 per cent of individuals with high-value deposits were found to have under-reported their income in tax returns, raising concerns about tax compliance and documentation.
To address these discrepancies, the government has introduced a new faceless audit mechanism through the Finance Bill, 2026. The system is designed to identify mismatches between declared income and actual expenditures using automated data matching and risk-based assessment procedures.
Officials said the faceless audit framework aims to enhance transparency, minimise human intervention and strengthen documentation across the economy. The digital audit process will enable tax authorities to detect unexplained wealth, undisclosed investments and inconsistencies in financial declarations more efficiently.
The FBR believes the new mechanism will play a crucial role in broadening the tax base and improving compliance by identifying individuals whose lifestyle, assets and expenditures do not align with their declared income.
At the same time, the government has proposed significant reductions in property-related tax rates through the Finance Bill, 2026 to encourage documentation of real estate transactions and facilitate investment in the sector.
Officials said the reduction in tax rates is intended to incentivise taxpayers to properly declare property purchases and sales while discouraging the concealment of transactions. The authorities expect the measures to improve reporting standards and increase voluntary compliance.
The FBR has emphasised that taxpayers who continue to hide property transactions or provide inaccurate declarations may face fines, penalties and further enforcement action under the new audit regime.
The latest initiative reflects the government’s broader efforts to strengthen tax administration, document the economy and curb tax evasion through greater use of technology and data analytics.
Tax experts believe the combination of lower transaction taxes and enhanced digital audits could encourage greater transparency in the real estate market while helping authorities identify previously undisclosed sources of income and wealth.
