KARACHI: The Federal Board of Revenue (FBR) is fully empowered to make property valuation according to the 18th Amendment into the Constitution, a senior tax official said, ruling out that any other agency is authorised to set such tables for calculating capital gains tax.
“The law empowers the FBR to collect capital gains tax on properties,” Rehmatullah Wazir Khan, Member Inland Revenue (Policy) told The News on the sidelines of a seminar hosted by Karachi Tax Bar Association (KTBA) Tuesday evening.
Khan also said the provinces are independent in collection of dues as per the laws and they are collecting various levies on property transactions according to the deputy collector rates. “But, they can follow the FBR valuation tables,” he added.
He said the FBR introduced the property valuation in order to net the untaxed money. The Member Inland Revenue told the participants the FBR is ready to amend the property valuation tables.
On FBR’s e-portal, he said an executive has been appointed to resolve all the issues related to information technology. He asked the tax practitioners to highlight their difficulties in submitting returns and statements.
On Benami laws, he said the bill is under discussion in the parliament and it will soon be approved to curb the tax evasion.
Shabbar Zaidi, Partner AF Ferguson and Co said the Benami transactions are undertaken to defraud the creditors, evade tax on the source of income and keep assets out of public eye.
Zaidi said under the proposed Benami law such a transaction is a crime and is subject to imprisonment. “That leverage is not directly available under the present income tax law,” he added.
He said Benami prevails in rural areas. “Urban properties are also in Benami but they are mostly in the cases where the sources are illegal,” he added.
Under the proposed law, the transactions undertaken prior to application of the law will fall outside its ambit, the tax professional said. Some people say that the law should be retrospective.
He said there should be provisions under the law regarding the assets held outside Pakistan and transactions undertaken by Pakistani citizens.
Tax consultant Abid Shaban, in his presentation said there were heated debates over the involvement of black economy in property business three years back. “Now there is a hue and cry after FBR takes steps to stop this menace,” he added.
Shaban said that the valuation rates of district officers are far below than the market values and they had been revised for the last five to six years. “Thus, real estate became a favorite place to park untaxed/black money,” he added.
He said the number of immovable property investment in GDP of Rs30-32 trillion is staggering. “There is not exact data with the FBR about the quantum of property investment, but am estimated number is Rs7 trillion,” he added.
Shaban said after the issuance of FBR’s valuation table, Sindh government revised valuation for the purpose of stamp duty and other levies. “Yet, still the values are far below the fair market values,” he added. He said there are anomalies in valuation tables issued by the FBR. Some slum properties have been valued at par with the real estate in the posh areas.
Haider Patel, ex-president KTBA said sudden changes were introduced in e-filing procedures that are causing immense difficulties for taxpayers and tax practitioners.
