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  • FTO declares Car Amnesty Scheme illegal

    FTO declares Car Amnesty Scheme illegal

    ISLAMABAD: Federal Tax Ombudsman (FTO) has declared an amnesty scheme for customs clearance of stolen imported cars without legal action.

    Customs authorities’ decision about clearance of stolen imported cars under Transfer of Residence, Baggage Scheme or Gift Scheme upon payment of redemption fine and taxes without following any legal provision has been decleared illegal by the Federal Tax Ombudsman.

    In an own motion investigation, the FTO Islamabad found that the decision taken in Customs conference held at the then CBR (FBR) on 02.08.2006 was illegal.

    The FTO’s investigation committee also underlined that without following due legal procedures such decisions will promote illegal import of stolen vehicles and facilitate international criminal activities.

    In this connection, FTO issued notices to Federal Board of Revenue (FBR). The FBR submitted report that Customs collectorates in Sialkot and Peshawar had cleared six and three such stolen imported vehicles in 2007 and 2013-2014 respectively.

    The FTO also recommended FBR to direct all Collectorates of Customs and other concerned authorities to stop these illegal practices forthwith.

    The Customs authorities were also directed that the stolen imported vehicles either should have been returned to authorities of the country from where vehicles were stolen after receiving occurring expenses or these vehicles should have been confiscated and disposed of through public auction.

    The committee also recommended FBR to direct MCC Sialkot to seize identified six vehicles and take appropriate legal action against importers involved in such illegal businesses.

    The FTO ordered a report from the competent authorities to be submitted within 45 days. Earlier, the FTO took the Own Motion in connection of the decision taken in Customs Conference held at the then CBR (FBR) on 02.08.2006, in which it was decided that the Collectorates may clear stolen imported vehicles after imposition of 30 percent redemption fine under the Provision of Customs Act 1969 while no action should be taken unless recognized agency of the foreign country approaches government of Pakistan.

    FBR’s appeal in bogus sales tax refunds rejected
  • ABAD seeks amnesty scheme extension for six months

    ABAD seeks amnesty scheme extension for six months

    KARACHI: Association of Builders and Developers (ABAD) has urged the government to extend the amnesty scheme for six months to document another Rs1 trillion.

    Fayyaz Ilyas, Chairman, ABAD, in a statement said that the investment in Construction Industry will double to Rs2 trillion if special construction package is extended at least for six months.

    Quoting the statement of Information Minister for State Farrukh Habib that an amount Rs1 trillion had been invested in construction industry after announcement of Amnesty Scheme, chairman ABAD said that a number of projects could not be registered under the scheme announced by the Prime Minister due to hurdles in approval, especially in Sindh.

    “If these projects could get chance to register under this scheme, the investment will double from Rs1 trillion to Rs2 trillion,” he said.

    Fayyaz Ilyas said that Prime Minister Imran Khan had extended date of Amnesty Scheme upto June 30, 2021. However, due to fourth wave of Covid-19 and hurdles in approval of projects, date of Amnesty scheme may be extended up to December 31, 2021 to fetch more investment in construction and real estate business.

    He said that despite second and third wave of Corona construction activities, especially production of steel, cement and other construction materials is on the rise due to Amnesty Scheme.

    Many of allied industries are planning expansion to meet rising demands and some of them have imported billions of rupees machineries to expand their industries, which shows that if the amnesty scheme is extended, the economy of Pakistan will become a vibrant and the dream of making Pakistan Asian Tiger could be realized, he hoped.

  • Bill proposes date extension to amnesty for builders and developers

    Bill proposes date extension to amnesty for builders and developers

    ISLAMABAD: The Finance Bill, 2021 has proposed to extend key dates for an amnesty to builders and developers who opt to pay tax computed under special provisions.

    KPMG Taseer Hadi & Co. Chartered Accountants said that the Finance Bill 2021 proposed to extend key dates for builders and developer who opt to pay tax computed under special provision in accordance with the rules in the Eleventh Schedule of Income Tax Ordinance 2001 on a project by project basis.

    Key proposed amendments are as under:

    —A new project or an incomplete existing project that is completed by 30 September 2023.

    —Any income, profits and gains of a builder or developer of an incomplete existing project earned up to tax year 2019 or tax year 2020 as the case may be.

    —Provisions of section 111 of Income Tax Ordinance, 2001 shall not apply to capital investment made in a new project in form of money or land subject to following conditions:

    -If the investment is made by a builder and developer being an individual, such person shall open a new bank account and deposit such amount on or before 30 June 2021.

    -If the investment is made by a builder and developer through a company or association of person being a single object company or association of person on or before 30 June 2021.

    -A person making investment as mentioned above shall submit a prescribed form on Iris web portal by 30 June 2021.

    -The project grey structure shall be certified in case of builder by approving authority or NESPAK on or before 30 September 2023.

    -In case of developer the approving authority or NESPAK shall certify landscaping on or before 30 September 2023 and a firm of chartered accountants shall certify that at least 50 per cent of plots have been booked for sale and at least 40 per cent of sale proceeds have been received by 30 September 2023 and 50 per cent of the roads have been laid up as certified by the approving authority or NESPAK.

    —Provisions of section 111 of Income Tax Ordinance, 2001 shall not apply to first purchaser of building or a unit of the building purchased from the builder from a new project or from incomplete existing project and payment is made through cross banking channel between date of registration of the project and ending on 31 March 2023.

    —Provisions of section 111 of Income Tax Ordinance, 2001 shall not apply to the purchaser of plots who intends to construct building if purchase and payment is made through cross banking channel on or before 30 June 2021 and construction is started on or before 31 December 2021 and such construction is completed on or before 30 September 2022.

  • Amnesty scheme should be extended for one year: ABAD

    Amnesty scheme should be extended for one year: ABAD

    KARACHI: The Association of Builders and Developers (ABAD) has demanded the government of extending the amnesty scheme granted for boosting of construction sector.

    ABAD Chairman Fayyaz Ilyas in a statement demanded to extend amnesty scheme for real estate and construction industry by at least one year.

    He said that due to unprecedented situation created by Corona pandemic all over the country and long delay in approval of building plans in Sindh a number of builders and developers could not register their projects under this amnesty scheme.

     Fayyaz Ilyas said that Prime Minister Imran Khan had announced and once extended Special package for real estate and construction industry for economic growth through construction industry because this industry is considered the backbone of the economy all over the world.

    Under extended package, source of income will not be asked for investment in real estate and construction upto 30th June, 2021, Fixed Tax Regime for builders and developers upto 31st December, 2021 and project completion period was extended upto 30th June, 2022.

    Chairman ABAD requested the government to extend these periods atleast upto 30th June, 2022, 31st December, 2022 and 30th June, 2023 respectively so that those people can avail this package who could not avail due to pandemic and lengthy delay in project approvals.

    He said that Pakistan’s economy like other parts of the world has suffered a lot due to corona pandemic.

    It is evident that despite the second wave of corona pandemic production of cement, iron bars, paints, tiles etc have created new records, he said adding that to continue momentum of the economic growth the government should extend the Special package for real estate and construction industry otherwise the results achieved through this package will go in the vain.

  • FBR officials given access to declarations filed under amnesty scheme

    FBR officials given access to declarations filed under amnesty scheme

    ISLAMABAD: The senior officials of the Federal Board of Revenue (FBR) have been authorized to access declarations of undisclosed income and assets under amnesty scheme of year 2019.

    The FBR issued SRO 369(I)/2021 to notify Assets Declaration Rules, 2021 dated March 31, 2021. Under rule 15 access has been authorized to declarations under the act i.e. Assets Declaration Act, 2019.

    According to the rule 15: Member Information Technology and Member IR (Operations) are authorized by the FBR to access the declarations under Section 14 of the Act, on their own or when a request by the concerned chief commissioner IR, supported with reasons, is forwarded to any of the aforementioned Members for provision of a copy of the declaration.

    Rule 8 of the notified SRO explained about treatment of asset, income or expenditure in a declaration. According to it the amount of asset, income or expenditure in a valid declaration for and upto tax year 2018 shall not be included in a taxable income of the declarant for any tax year under the Income Tax Ordinance, 2001.

    The FBR explained: “For removal of doubt it is clarified that any assets, income or expenditure that can be plausibly traced as sourced in assets or income declared in a valid deduction shall not be called into question.”

    Rule 9 has explained about the proceedings under the Income Tax Ordinance, 2001 in respect of the information received other than under Common Reporting Standards (CRS).

    Sub Rule 1 stated that subject to sub-rule (2), no proceedings under any provisions of the Income Tax Ordinance, 2001 shall be initiated on the basis of any information relating to any asset, income or expenditure as the 30th day of June 2018 or any prior period, if the information relates to a declarant under the Asset Declaration Act, 2019 and the declarant files an irrevocable written statement along with documentary evidence to the effect that the source of the asset, income or expenditure in the received information has been the assets, income or expenditure declared under the Act. The declarant shall file such a statement on a notice under Section 176 of the Income Tax Ordinance, 2001 along with the related documentary evidence.

    Sub-Rule 2 of Rule 9 stated that the nature and source of asset, income or expenditure shall not be treated as explained and the Commissioner Inland Revenue or his delegate shall be entitled to proceed under Section 111 of the Income Tax Ordinance, 2001, on the basis of definite information acquired from any source other than a valid declaration itself, in following cases:

    (a) where the value of asset, income or expenditure, as at the 30th day of June 2018 or before as per the definite information is in excess of value as per declaration; and

    (b) where the source of asset, income or expenditure relates to a person other than the declarant.

    Sub-Rule 3 of Rule 9 stated that where an action under Section 111 of the Income Tax Ordinance, 2001 as undertaken in accordance with the sub-rule (2) results in invalidation of the declaration then such an action cannot be initiated without prior approval, for reasons to be recorded in writing, of the chief commissioner inland revenue as defined in clause (11B) of the Section 2 of the Income Tax Ordinance, 2001.

    Rule 10 explained declaration filed and the information received under CRS. According to sub-rule 1 of the Rule 10, where a foreign asset or income is reported to the FBR under CRS, then prior to any action under any provision of the Income Tax Ordinance, 2001, the FBR shall ensure compliance of the condition under the protocol for CRS including exchange of information by the person whose information has been received. On completion of that process, following procedure shall be followed:

    (a) the commissioner inland revenue of the concerned person or delegate of the commissioner shall issue a notice under section 176 of the Income Tax Ordinance, 2001;

    (b) the notice referred in clause (a) of this sub-rule shall enquire as to whether or not such asset, income or expenditure has been declared under the Voluntary Declaration of Domestic Assets Act, 2018 and the Foreign Assets (Declaration and Repatriation) Act, 2018 or Asset Declaration Act, 2019;

    (c) if the taxpayer informs the commissioner Inland Revenue or his delegate that the asset, income or expenditure, as reported under the CRS has been declared in a declaration, the commissioner Inland Revenue or his delegate shall require the taxpayer to provide a copy of the declaration; and

    (d) the taxpayer on receipt of such notice under section 176 of the Income Tax Ordinance, 2001 shall:

    (i) provide a copy of his declaration where such asset, income or expenditure, as the case may be, has been declared; and

    (ii) provide a copy of the declaration of another person, being the beneficial owner, where the asset, income or expenditure referred to in the CRS has been declared.

    Sub-Rule 2 of the Rule 10 stated that subject to the provision of Section 11 of the Asset Declaration Act, 2019, in case the information received under CRS as referred above are in agreement then a confirmation in writing shall be issued by the Commissioner Inland Revenue or his delegate that the asset, income or expenditure to the extent referred to in the letter has been declared under the respective declaration law.

    Through Rule 11, the FBR explained the beneficial ownership. The sub-rule 01 of Rule 11 stated that in case of matter relating to legal or beneficial ownership of an asset, income or expenditure, the claim of beneficial ownership shall not be questioned unless there is definite information that the asset was created out of sources of a person other than the person claiming the beneficial ownership.

    The sub-rule (2) of the Rule 11 stated where in the case of a foreign trust the source of contribution to the trust is claimed by any person other than settler, beneficiary or the trustees, the person so claiming shall be entitled to declare his contribution under the Asset Declaration Act, 2019. Such declaration shall not be called in question merely on account that such person is not the settler, beneficiary or trustee of the trust.

    Provided that where the asset, income or expenditure is reported under CRS in the name of settler, beneficiary of the trust or any person, proceedings shall be initiated against such person in the absence of a declaration by such settler, beneficiary or other persons;

    Provided further that in such a case any claim, by a third person as contributor to the asset, income or expenditure, shall only be considered if supported with documentary evidence.

    Through Rule 12, the FBR also explained declaration made by relatives of holder of public office. Sub-rule 1 of the Rule 12 stated that the status of a person as to the holder of public office or otherwise and the period during which a person remained holder of public office shall not be questioned or challenged by the commissioner Inland Revenue or his delegate if the same is confirmed by the relevant office.

    Sub-rule 2 of the Rule 12 stated that no declaration by a person entitled to file a declaration under the Asset Declaration Act, 2019 shall b questioned only for the reason that the declarant is a relative other than spouse and dependent children of the declarant of a person being a holder of public office unless it is confirmed through a definite information that the asset, income or expenditure have been created out of the undisclosed sources of a holder of public office.

  • Amnesty date for developers, builders extended up to June 30

    Amnesty date for developers, builders extended up to June 30

    ISLAMABAD: The federal government has extended the last date for amnesty scheme to builders and developers up to June 30, 2021, sources said on Thursday.

    The date for availing immunity from declaration of investment by builders and developers is expiring today i.e. December 31, 2020.

    The sources said that the date has been extended for next six months.

    Similarly, project completion date has also been extended up to September 30, 2023 from September 30, 2022.

    Further, availing the fixed tax regime for builders and developers has also been extended up to December 31, 2021.

    The amendment to existing laws may be made through presidential ordinance, the sources added.

    Following is the existing law related to builders and developers:

    Section 100D: Special provisions relating to builders and developers. –

    (1) For tax year 2020 and onwards, the tax payable by a builder or a developer, as defined in sub-section (9), who opt to pay tax under this section shall be computed and paid in accordance with the rules in the Eleventh Schedule on a project by project basis on the income, profits and gains derived from the sale of buildings or sale of plots, as the case may be, from–

    (a) a new project to be completed by the 30th day of September, 2022; or

    (b) an incomplete existing project to be completed by the 30th day of September, 2022:

    Provided that any income, profits and gains of a builder or developer of an incomplete existing project earned up to tax year 2019 shall be subject to the provisions of this Ordinance as were in force prior to the commencement of the Tax Laws (Amendment) Ordinance, 2020 (Ordinance I of 2020):

    Provided further that any income of a builders or developer other than income, profits and gains subject to this section shall be subject to tax as per the provisions of this Ordinance.

    (2) Where sub-section (1) applies,-

    (a) the income shall not be chargeable to tax under any head of income in computing the taxable income of the person;

    (b) no deduction shall be allowed under this Ordinance for any expenditure incurred in deriving the income:

    (c) the amount of the income shall not be reduced by –

    (i) any deductible allowance under Part IX of Chapter III: or

    (ii) the set off of any loss;

    (d) no tax credit shall be allowed against the tax payable under sub-section (1) except credit for tax under section 236A or 236K collected from the builder or developer after the commencement of the Tax Law (Amendment) Ordinance, 2020 (1 of 2020) on purchase of immoveable property utilized in a project;

    (e) there shall be no refund of any tax collected or deducted under this Ordinance;

    (f) if the tax payable has not been paid or short paid, the said amount of tax may be recovered and all the provisions of this Ordinance shall apply accordingly; and

    (g) section 113 and 113C shall not apply on the turnover, income, profits and gains of a builder or developer from a project.

    (3) The provisions of section 111 shall not apply to capital investment made in a new project under clause (a) of sub-section (1) in the form of money or land, subject to the following conditions, namely:-

    (a) if the investment is made by a builder or developer being an individual-

    (i) in the form of money, such builder or developer shall open a new bank account and deposit such amount in it on or before the 31st day of December, 2020; or

    (ii) in the form of land, such builder or developer shall have the ownership title of the land at the time of commencement of the Tax Laws (Amendment) Ordinance, 2020 (I of 2020);

    (b) if the investment is made by a person in a project through a company or an association of persons,-

    (i) such company or association of person shall be a single object (builder or developer) company or association of persons registered under the Companies Act, 2017 (XIX of 2017), the Limited Liability Partnership Act, 2017 (XV of 2017) or the Partnership Act 1932 (IX of 1932), as the case may be, after the date of commencement of the Tax Laws (Amendment) Ordinance, 2020 (I of 2020) and on or before the 31st day of December, 2020; and

    (ii) the person shall be a member or shareholder of such association of persons or company, as the case may be; and if the capital investment is made,-

    (i) in the form of money, such amount shall be invested through a crossed banking instrument deposited in the bank account of such association of persons or company, as the case may be, no or before the 31st day of December, 2020; or

    (ii) in the form of land, such land shall be transferred to such association of persons or company, as the case may be, on or before the 31st day of December, 2020:

    Provided that the person shall have the ownership title of the land at the time of commencement of the Tax Laws (Amendment) Ordinance, 2020 (I of 2020)

    (c) a person making an investment under clause (a) or (b) shall submit a prescribed form on Iris web portal;

    (d) the money or land invested under clause (a) or (b) shall be wholly utilized in a project; and

    (e) completion of the project shall be certified in the following manner, namely:-

    (i) in case of a builder, the map approving authority or NESPAK shall certify that grey structure as per the approved map has been completed by the builder on or before the 30th day of September, 2022; and

    (ii) in case of a develop,-

    (A) the map approving authority or NESPAK shall certify that landscaping has been completed on or before the 30th day of September, 2022;

    (B) a firm of chartered accountants having an ICAP QCR rating of ‘satisfactory’, notified by the Board for this purpose, shall certify that at least 50 percent of the plots have been booked for sale and at least 40 percent of the sale proceeds have been received by the 30th day of September, 2022; and

    (C) at least 50 percent of the roads have been laid up to sub-grade level as certified by the approving authority of NESPAK.

    (4) The provisions of section 111 shall also not apply to.-

    (a) the first purchaser of a building or a unit of the building purchased from the builder in respect of purchase price of the building or unit of the building subject to the following conditions, namely:-

    (i) full payment is made through a crossed banking instrument to the builder during a period starting from the date of registration of the project with the Board under this section and ending on the 30th day of September, 2022, in case the purchase is from a new project; and

    (ii) full or balance amount of payment is made through a crossed banking instrument to the builder during a period starting from the date of registration of the project with the Board under this section and ending on the 30th day of September, 2022, in case the purchase is from an existing incomplete project; and

    (b) the purchaser of a plot who intends to construct a building thereon, if-

    (i) the purchase is made on a before the 31st day of December, 2020;

    (ii) the full payment is made on or before the 31st day of December, 2020 through a crossed banking instrument;

    (iii) construction on such plot is commenced on or before the 31st day of December, 2020;

    (iv) such construction is completed on or before the 30th day of September, 2022;and

    (v) the person registers himself with the Board on the online Iris web portal.

    (5) Where sub-section (3) or (4) apply, the value or price of land or building, as the case may be, shall be the higher of clause (a) or (b) below:-

    (a) 130 percent of the fair market value as determined by the Board under sub-section (4) of section 68; or

    (b) at the option of the person making investment, the lower of the values as determined by at least two independent valuers from the list of valuers approved by the State Bank of Pakistan.

    (6) Sub-sections (3) and (4) shall not apply to –

    (a) holder of any public office as defined in the Voluntary Declaration of Domestic Assets Act, 2018 or his benamidar as defined in the Benami Transactions (Prohibition) Act, 2017 (V of 2017) or his spouse or dependents;

    (b) a public listed company, a real estate investment trust or a company whose income is exempt under any provision of this Ordinance; or

    (c) any proceeds derived from the commission of a criminal offence including the crimes of money laundering extortion or terror financing but excluding the offences under this Ordinance.

    (7) Divided income paid to a person by a builder or developer being a company out of the profits and gains derived from a project shall be exempt from tax.

    (8) Notwithstanding anything contained in this section or the Eleventh Schedule, where a return or declaration has been made through misrepresentation or suppression of facts, such return or declaration shall be void and all the provisions of this Ordinance shall apply:

    Provided that no action under this sub-section shall be taken if such misrepresentation has been made on account of a bona fide mistake:

    Provided further that no action under this sub-section shall be taken without providing an opportunity of being heard and without prior approval of the Board.

    (9) In this section.-

    (a) “builder” means a person who is registered as a builder with the Board and is engaged in the construction and disposal of residential or commercial buildings;

    (b) “capital investment” means investment as equity resources and does not include borrowed funds;

    (c) “developer” means a person who is registered as a developer with the Board and is engaged in the development of land in the form of plots of any kind either for itself or otherwise;

    (d) “existing project” means a construction or development project, which-

    (i) has commenced before the date of commencement of the Tax Laws (Amendment) Ordinance, 2020;

    (ii) is incomplete;

    (iii) is completed on or before the 30th day of September, 2022;and

    (iv) a declaration is provided in the registration from under Eleventh Schedule to the effect of percentage of the project completed up to the last day of the accounting period pertaining to tax year 2019;

    (e) “first purchaser” means a person who purchases a building or a unit, as the case may be, directly from the builder and does not include a subsequent or a substituted purchaser;

    (f) “new project” means a construction or development project, which-

    (i) is commenced during the period starting from the date of commencement of the Tax Laws (Amendment) Ordinance, 2020 and ending on the 31st day of December, 2020; and

    (ii) is competed on or before the 30th day of September, 2022;

    (g) “project” means a project for construction of a building with the object of disposal, or a project for development of land into plots with the object of disposal or otherwise;

    (h) “registered with the Board” means registered after submission of form on project-by-project basis on the online Iris web portal;

    (10) The provisions of the Ordinance not specifically dealt with in this section or the rules made thereunder shall apply mutatis mutandis to builders and developers in so far as they are not inconsistent with this section or the rules made thereunder.

  • Amnesty to builders, developers be extended for one year: FPCCI

    Amnesty to builders, developers be extended for one year: FPCCI

    KARACHI: Pakistan’s apex trade body has urged the prime minister to extend the date for availing a tax amnesty for builders and developers for one year.

    Mian Anjum Nisar, President, Federation of Pakistan Chambers of Commerce and Industry (FPCCI) while appreciating the Prime Minister of Pakistan for introducing Amnesty Scheme for Construction Industry, said that the scheme has boosted the socio-economic status of daily wagers and supported the construction and its allied sectors.

    It was a tremendous decision for the mitigation of COVID-19 impact over Pakistan. This incentive scheme attracts the builders, developers, and purchasers of housing units and plots who have not availed of it yet.

    Even the negative economic effects of Covid-19 pandemic have not hindered the Construction Industry in providing immediate jobs back to the millions of daily wages earners.

    He informed that Prime Minister Imran Khan had announced the tax amnesty scheme for the real estate and construction sector in April 2020 and will remain valid till 31st December 2020.

    The relief package was for the construction industry with twofold aim of providing employment to daily wage earners, and spurring economic activity.

    Those availing of this scheme need to register with the designated FBR portal since the ordinance was promulgated from April 2020 to December 31, 2020.

    The immunity from declaring the source of income was also available to builders, developers, and the purchasers of the housing societies and projects, and tax on gains on investment had been waived for all citizens who wanted to sell their homes.

    The tax amnesty had been given as part of the Prime Minister Package to lessen the impacts of the COVID-19 outbreak on the construction sector.

    President FPCCI urges the Prime Minister to extend the time period of the Amnesty Scheme for Construction Industry and introduce the same amnesty scheme facility to other sectors and industries.

    This scheme can support the economy of Pakistan during the second wave of COVID-19 and it will proved to be a turning point for the economy of Pakistan & for the revival of the housing and construction industry in Pakistan.

    He further said that if the Amnesty Scheme continues for another year the daily wagers, the most vulnerable segment of the population can get back to work to earn a respectable earning for their families as they were fighting with the second phase of COVID-19 and poverty at the same time.

  • FBR initiates framing ‘concealment of assets’ cases against defaulting amnesty declarants

    FBR initiates framing ‘concealment of assets’ cases against defaulting amnesty declarants

    KARACHI: Federal Board of Revenue (FBR) has initiated the process of framing cases under concealment of assets against persons who declared under an amnesty scheme but failed to pay taxes within the given timeline.

    (more…)
  • FBR urged to extend date for tax amnesty payment

    FBR urged to extend date for tax amnesty payment

    KARACHI: Karachi Tax Bar Association (KTBA) has urged Federal Board of Revenue (FBR) to extend the date for making payment for amnesty scheme declarants.

    The KTBA in a letter to FBR chairperson on Thursday pointed out that the due date of payment of tax under section 6 of the Assets Declaration Ordinance, 2019 (“ADO, 2019”), which in terms of section 6 of the ADO was June 30, 2019.

    A declarant was also provided with an option to pay the tax on deferred payment basis in installment till the date of June 2020.

    This late payment, however, had to be made along with default surcharge at the rates given in Clause (2) of the Schedule to the ADO, 2019.

    The KTBA said that the maximum rate of default surcharge is 40 percent which would apply if the tax payment is made by 30 June 2020.

    The ongoing circumstances in the wake of current pandemic of COVID-19 which, undisputedly, has affected the life and business of every individual, adversely and taxpayers are no exception.

    The fall out of the cessation of business activities in the last three (03) months due to intermittent lockdown orders has effected every ones’ taxpaying capacity as well.

    “It has become quite difficult for the taxpayers to make the payment of tax as per the proviso discussed above, by 30 June 2020,” the KTBA said.

    In this connection, on behalf of our members, we would suggest that the following may be considered:

    1. the due date of payment of tax may be extended up to 31 December 2020 without increasing the rate of default surcharge further

    AND

    2. allow adjustment from tax refund, if any, available to the taxpayer, against the aforesaid payment.

    The measures will not only repose confidence to the taxpayers but will also show the resolve of the FBR to address a genuine issue.

  • Key points of amnesty scheme for real estate sector

    Key points of amnesty scheme for real estate sector

    KARACHI: The federal government has made amnesty granted to real estate sector to the part of Finance Bill, 2020 in order to get approval from the Parliament.

    Deloitte Yousuf Adil Chartered Accountants in their budget explanations said that to stimulate investment in real estate and construction sector, a no-questions-asked amnesty has been introduced.

    Under this amnesty the Federal Board of Revenue (FBR) has been restrained from asking question related to source of investment made into the real estate / construction business.

    Both previous and current federal governments have launched tax amnesty schemes in 2018 and 2019, albeit the scope of this scheme is limited to investment made in construction sector only.

    The proponent of this particular amnesty scheme argues that this would act as a catalyst to increase economic activity in the country thereby improving employment opportunities as number of sub-sectors and small and medium size industries are associated with construction industry.

    The newly introduced scheme provides immunity from the provisions of section 111 of the Ordinance , and no questions will be asked regarding source of funds from investors making capital investment in new construction projects in the form of money or land, either as an individual, as an association of persons or a company, subject to conditions as explained below.

    For individuals:

    Monetary: Investor shall open a new bank account and deposit such amount in it on or before the 31st day of December, 2020

    Land: Investor shall have the ownership title of the land at the time of commencement of the Tax Laws (Amendment) Ordinance, 2020

    Corporate shareholder / Partner:

    Monetary: Such amount shall be invested through a crossed banking instrument deposited in the bank account of such association of persons or company, as the case may be, on or before the 31st day of December, 2020

    Land: Such land shall be transferred to such association of persons or company, as the case may be, on or before the 31st day of December, 2020. Provided that the person shall have the ownership title of the land at the time of commencement of the Tax Laws (Amendment) Ordinance, 2020

    Registration: The Company or AOP shall be a single object company duly registered under the Companies Act, 2017 or Partnership Act, 1932 as the case may be.

    Additional conditions to be met:

    • Prescribed IRIS form shall be submitted by the person making investment.

    • The investments made shall be wholly utilized in a project.

    • Grey structure in case of builders and landscaping in case of developers have been completed on or before September 30, 2022, and duly certified by NESPAK or respective map approving authority.

    • Further, for land developer, the following additional conditions should be met;

    • 50 percent of plots have been booked for sale and 40 percent of sale proceeds thereof have been received by September 30, 2022 as duly certified by specified chartered accountancy firm.
    • 50 percent of the project roads have been laid up to sub-grade level as duly certified by NESPAK.

    • The value or price of the land or building shall be higher of

    a) 130 percent of FBR assessed fair market value; or

    b) At the option of person making investment, lower of the value determined by at least two independent SBP approved valuers.

    Exclusion

    The following incomes or persons are excluded from the relief provided under the amnesty scheme:

    Holder of public office, benamidar or his spouse or dependents; or

    Public Listed Company, real estate investment trust or any company whose income is exempt under the Ordinance.

    Proceeds of crime including money laundering, terror financing excluding tax evasion.

    Restriction of Ownership Changes

    • Under the new amnesty, no change in ownership shall be allowed for incomplete projects except where 50 percent cumulative cost on the project has been incurred as certified by prescribed Chartered Accountants firm, with the exception of legal transmission to heirs.

    • Inclusion of partners or shareholders after December 31, 2020 is permissible; however, such investors shall not be eligible to avail tax amnesty.

    Amnesty to the purchaser

    Provisions of section 111 shall also not apply to:
    the first purchaser of a building or a unit in the building in respect of the purchase price both in case of new project or existing incomplete project where payment is routed through crossed banking instrument between the date of registration of project with the FBR and September 30, 2022.

    The purchaser of plot for building construction where the purchase, the payment thereof and commencement of construction has been made on or before December 31, 2020 subject to construction completion by September 30, 2022 and subject to registration of such purchaser with FBR on IRIS portal.

    Thus no questions would be asked from the purchaser of building or plot regarding source of funds who complies with the above mentioned conditions.