close
Thursday March 28, 2024

FBR trawls property investors’ data to broaden tax net

By Shahnawaz Akhter
March 17, 2018

KARACHI: Tax authorities started seeking personal and financial data of property owners from realty dealers to net untaxed money in an estimated Rs7 trillion real estate market – a latest move that is irking builders and developers.

Officials said on Friday the Federal Board of Revenue (FBR) started screening the investments made in properties with an objective to identify new taxpayers and compel the existing taxpayers to file their annual tax returns and declare assets.

An official at Regional Tax Office-II (RTO) Karachi said the tax authorities have so far issued notices to property registration authorities and housing societies to obtain details of investors. FBR granted property registration authority, housing societies and construction industry with power to collect withholding tax from buyers and sellers of properties.

“Now, we have invoked section 176 of Income Tax Ordinance 2001 to obtain information of investors of the past five years from the withholding agents,” a RTO-II official said. “The real estate sector is one of the biggest undocumented sectors.”

Various estimates put the investment in real estate sector at more than seven trillion rupees. Officials of Association of Builders and Developers Association (Abad), which is the leading body representing builders in Pakistan, confirmed that the association’s members have received a number of notices seeking investors’ information.

“All the required information is already available with the FBR when property is transferred,” a letter sent by Abad to Adviser to Prime Minister on Finance Miftah Ismail said, requesting him to stop the exercise.

ABAD officials said FBR officers are asking the association’s members to personally appear and submit the required information, “which is resulting in harassment”. Arif Yousuf Jeewa, chairman of Abad said the FBR’s drive would sabotage the proposed tax amnesty scheme as well as affect foreign investments.

“Construction sector is the second largest job provider and the government should take action to stop the harassment,” Jeewa said. “If the FBR will not change its attitude builders and developers will be contained to sale and purchase of properties and the construction sector will gradually be abolished.”

Abad chief said all builders and developers provide details of allottees to the FBR at the time of property registration. FBR collects capital gains tax and advance income tax at the time of registration and lease of the properties.

Jeewa said Abad is trying to bring foreign investments into Pakistan and a number of foreign investors are ready to invest into real estate sector, “but the move of FBR has again shattered trust of foreign investors”.

FBR’s annual report for tax year 2016 showed that it already obtained information of 588,843 individuals who were involved in property transactions.

Tax officials said the issuance of latest notices for obtaining information is part of the broadening of tax base drive. Recently, FBR set up zones in Karachi, Lahore and Islamabad to broaden the tax base and get more taxpayers into the tax net. The official said monitoring of withholding tax would help in encouraging taxpayers to file returns. The drive will identify the non-filers who make huge transactions but remain non-compliant, the official added.