Property price to be fixed on market value for tax

Amendment in tax laws to streamline real estate investments; implementation from July 1

ISLAMABAD: An important amendment has been made to Section 68 of the Income Tax Ordinance 2001 through the Finance Act 2016, which will be effective from July 1.

Under the amendment, the property evaluation rate set by the provincial governments will no longer remain relevant.After that, all investors will have to get their properties evaluated through the valuers of the State Bank of Pakistan (SBP) under a new mechanism.

One or more valuers of the SBP will fix the real market value of the immovable property and refer it to the FBR Inland Revenue Department.This amendment will do away with the informal economy or black economy in the real estate sector to a great extent.

It will not only bring black money into the tax net but also put high penalties on tax evaders under Section 192-A.The penalties can amount to 100 percent of the evaded tax. These will be in addition to the additional tax imposed on the evaders.

This amendment will direct unproductive investment to industry and as a result add to the Gross Domestic Product (GDP), creating job opportunities.According to an estimate, at present about Rs30,000 billion of black money is being used in the sale and purchase of property.