FBR targets real estate buyers, property investors

Broadening tax base

KARACHI: The tax authorities have been working to clamp down on tax avoidance by real estate buyers and property investors in various priced projects in Karachi, an official told The News on Thursday.

The official said the Federal Board of Revenue (FBR) has served notices to several real estate investors and property holders to broaden its tax net.

 “We have acquired all the data of property bookers at new luxury projects in Karachi and those still out of the tax net are being served notices to broaden the tax base,” the official said.

The property bookers are being evaluated on the basis of annual installments, and those paying over Rs400,000 per annum in installment will be brought into the tax net. For instance, a person paying Rs1 million per annum as installment is required to pay income tax on the amount.

“This is an ongoing process. Thousands of notices have been served to the property bookers in the first phase; data is being collected from all other real estate developers and notices will be served to their property holders / bookers soon,” the official said. 

The official also said that the annual installments being paid would be considered the annual income and tax would be levied according to the statutory slabs.

The FBR has taken this initiative to check whether tax has been paid on the money used for purchase of plots / properties in major housing societies and regional tax offices (RTOs) throughout the country are advised to tap real estate investors still out of the tax net.

The revenue authority is collecting data from such sectors where expenditures and growth have increased in order to broaden the tax base.

The government is also taking details from motor registration authority, travel agencies and other relevant departments to examine the source of income and payment of taxes of those who travel aboard frequently. 

The official said that the Directorate of Intelligence and Investigation (I&I) Inland Revenue, Karachi undertook anti-money laundering drive and identified hundreds of people investing in Dubai properties.

The authorities believed that after such a crackdown black money would be invested in local properties and stock exchanges. Therefore, the up-to-date information gathering is also under process.

Last month, Dubai Land Department (DLD)'s transactions report issued by its Real Estate Research and Studies Department revealed that the sum of real estate investment transactions for 2015 exceeded 135 billion dirhams.

The report showed that 55,928 investors of 150 nationalities made real estate investments in Dubai's property sector last year.

The total value of foreign investment in the Dubai real estate market in the year 2015 amounted to more than 74 billion dirhams from 35,165 investors.

Pakistani nationals were ranked the third most value foreign investors, making eight billion worth of property transactions from 6,106 investors.