FBR directs chief commissioners to monitor process

Islamabad

The FBR on Wednesday directed chief commissioners (CC) all over the country to hold meetings with the provincial registration authorities for tax collecting and land transactions in accordance with revised tables of market value notified by the board under their respective jurisdictions. 

According to official communications sent out to all chief commissioners of the Regional Taxpayers Offices (RTOs) all over the country, stating that chief commissioners are requested to personally monitor the matter as it involves substantial revenue implications.

After determination of fair market value under Section 68 of the Income Tax (Amended) Ordinance 2016 that prior to Finance Act 2016, fair market value for the purpose of probing the source of investment in acquisition of immovable property was determined by the commissioner. 

However, under the Income Tax Rules, fair market value was to be determined as value fixed for the purpose of collecting stamp duty by the provincial revenue authorities, and it was binding upon the commissioner Inland Revenue. Similarly, the capital gain on the sale of immovable property under Section 37 and collection of tax under sections 236C and 236K of the Income Tax Ordinance 2001, used to be computed on the value notified by the provincial revenue authorities. Through Finance Act 2016 the powers of commissioners under Section 68 have been withdrawn and valuation is to be made by panel of approved Valuers of State Bank of Pakistan. 

Similarly, the binding nature of the value determined by the provincial revenue authorities for the purpose of collection of the stamp duty has been withdrawn.

The business community and various associations of realtors, the Federation of Pakistan Chamber of Commerce and Industries and Chambers of Commerce and Industries of all the four provinces in their post budgetary review expressed serious concerns and had agitated against this new measure.

The FBR held a number of meetings with them with a view to resolving their genuine problems. As a result of these deliberations, it has been decided that instead of valuation to be made by approved Valuers of State Bank of Pakistan, the FBR would notify fair market valuation table itself after consultation with all the stakeholders for the purpose of sections 37(1A), Ill, 236-C and 236-K. Consequently, amendments to Income Tax Ordinance 2001 was introduced through Income Tax (Amendment) Ordinance 2016. 

Pursuant to the issuance of this Ordinance, the withholding tax on sale and purchase of immovable properties shall be collected on FBR notified rates of immovable properties. It is, therefore, advised that meetings should be held with the property registration authorities falling under their jurisdiction for making coordinated efforts for the collection of withholding tax under section 236-C and 236-K on the basis of valuation table notified by the FBR.