FBR nets Rs50bln undocumented properties in July-January

KARACHI: The Federal Board of Revenue (FBR) documented Rs50 billion worth of undeclared properties under a tax amnesty scheme during the first seven months of the current fiscal year of 2018/19, sources said on Thursday.

In December 2016, the government announced the tax amnesty through Income Tax (Fourth Amendment) Act 2016 by inserting a section (236W) into the Income Tax Ordinance

2001. Under the amendment, a purchaser of property was allowed to pay withholding tax of three percent to document the property.

The buyer was further exempted from probe into source of income if the property value is higher than the district collector value, but not higher than the FBR’s valuation table.

The government, however, established a directorate general of immovable properties through Finance Act 2018 to stop amnesty to black money.

Yet, it was added that it would only be implemented on notification through official gazette.

Sources said the FBR has to implement the law by notifying rules and deploying staff to activate the directorate. Though the FBR introduced the rules and posted staff after eight months of the legislation, the notification required to activate the directorate has yet to be issued.

The FBR managed to collect Rs1.53 billion in taxes on the transactions from purchasers in the July-January period. The figure was 31 percent down from Rs2.22 billion in the corresponding period of the last fiscal year.

Sources said the decline in tax collection was mainly due to a law that was introduced through Finance Act 2018 to stop amnesty for the following tax years.

In January, the FBR collected Rs289 million through withholding tax under the real estate amnesty compared with Rs331.25 million in the corresponding month of the last year, showing a decline of 12.6 percent.

The FBR also collected withholding tax from seller of property under a law (section 236C). The tax was one percent on filers and two percent on non-filers. Such tax collection posted a 3.3 percent growth to Rs2.9 billion during the first seven months of the current fiscal year.

The figure was Rs2.81 billion in the corresponding period of the last fiscal year.

Likewise, the FBR also collected Rs6.63 billion in taxes from purchaser of property valuing above Rs4 million under a law (section 236K).

The tax rate was two percent on filers and four percent on non-filers. The collection fell from Rs6.78 billion in the corresponding period of the last fiscal year due to changes in law.

The sources in FBR said as the directorate of immovable properties gets active the tax rate under 236K would be one percent for non-filers and the amnesty would be withdrawn.