PkRevenue.com – The Institute of Chartered Accountants of Pakistan (ICAP) has proposed that the tax authorities implement real-time reporting of property transactions.
In its budget proposals for 2024-25, ICAP suggested that housing societies, developers, and builders engaged in the sale of plots and building units should integrate their systems with the Federal Board of Revenue (FBR). This integration should follow the same mechanism as the Point of Sale (POS) integration, allowing for the real-time transfer of data regarding the sale and transfer of files, plots, and building units.
ICAP emphasized that this real-time information should be transferred to the Directorate of Broadening of Tax Base (BTB). The BTB would then analyze and cross-match this data with the wealth statements and tax returns of both buyers and sellers. This measure aims to ensure accurate reporting and transparency in property transactions, enabling the FBR to identify discrepancies and potential tax evasion more effectively.
To facilitate this process, ICAP recommended that the FBR modify its tax return and wealth statement formats. The goal is to create a standardized property declaration mechanism, which would simplify the task of matching property details for field officers and calculating capital gains. Such a standardized format would ensure consistency in reporting, making it easier to track property transactions and their impact on tax liabilities.
The recommendation comes in the context of Pakistan’s broader efforts to enhance tax compliance and increase revenue collection. Property transactions have traditionally been a significant area where underreporting and tax evasion occur. By implementing real-time monitoring, the FBR would gain better visibility into the property market, helping to broaden the tax base and ensure that all transactions are duly reported and taxed.
ICAP’s proposal aligns with the government’s ongoing digitalization efforts to improve tax administration and compliance. Real-time monitoring of property transactions would not only enhance transparency but also streamline the process of tax collection, reducing the administrative burden on both taxpayers and tax authorities. This initiative is expected to contribute significantly to the country’s fiscal health by increasing tax revenues without imposing additional fixed administrative costs.
ICAP’s recommendation for real-time reporting of property transactions represents a strategic move towards improving tax compliance and revenue collection in Pakistan. By integrating property transaction systems with the FBR and standardizing the reporting formats, the government can better monitor and regulate the property market, ensuring fair and accurate tax assessments.
