Suspicious Transaction Reports: FBR sends over 50,000 notices to real estate agents, jewellers, money-changers

ISLAMABAD: The FBR has sent out over 50,000 notices to registered real estate agents, jewelers, money changers and other professionals under Designated Non-Financial Businesses and Professions (DNFBPs) for failing to comply with FATF condition with regard to generate Suspicious Transaction Reports (STRs).

The STRs are required to be generated by these sectors if they find that buyers are making investments beyond their legitimate sources of income. The FBR has placed DNFBP mechanism to comply with the FATF conditions. In a written notice sent out to real estate agents in March 2021, the FBR’s DNFBP unit stated that "a questionnaire was sent to you for timely submission under Anti Money Laundering Act (AMLA) 2010 but you failed to submit the same despite reminders.

You are provided with the last opportunity but in case you failed, any default may draw you to the high risk and sanction may be imposed." The FBR made it clear three contraventions were made including failure to get registered as DNFBP, delay in submission of off-site monitoring questionnaire and non-implementation of rules and regulations issued vide SRO-924 (1) 2020. "In future your compliance will be checked through on site inspection by our inspection teams against the aforementioned legal provisions. Any default may entail imposition of sanctions as mentioned in SRO-950 (1) 2020," the FBR stated. Now the FBR’s DNFBP high-ups decided to kick-start on-site inspection of office premises of real estate agents from next fiscal year starting from July 2021.

Muhammad Ahsan Malik, Convener FPCCI for real estate sector for Punjab, on Monday told journalists that presently the FBR’s DNFBP was sending notices to only filers and registered real estate agents whereas no effort for registration of ‘non filer’ for registration as DNFBP was being made by FBR.

Presently, real estate agents, builders, developers, money changers and jewelers are treated under the same FBR SRO-924. These businesses have no uniformity in their way of working. It is suggested that separate laws should be made for each category, keeping in view their mode of business. The legal requirements of DNFBP should be fulfilled by transferring/registration authorities/societies i.e. CDA, LDA, KDA, Bahria Town, DHAs and revenue authorities etc. and not by the individual real estate agents, he proposed. He said that the evaluation table of FBR and DC Rates should not be enhanced because of the prevailing pandemic situation. The government should remove all anomalies in the FBR and DC Rates.

Presently, the filer is paying 1pc and non-filer is paying 2pc advance income tax on the purchase of property. It is suggested that this tax should be reduced to 0.25pc for ‘filer’ and for non-filer it should remain at 2pc.

About the Capital Gain Tax-U/S37 for immovable property, Ahsan Malik said the maximum period for determining the gain tax may be fixed at 3 years instead of 4 years, with 5pc (Five Percent) Flat Rate. Reduction in the maximum period for determining Gain Tax to 3 years with 5pc will enhance the sale/purchase activity and boost the economy. About the Capital Gain Tax-(236-C) for immovable property, he said presently sellers (Filer) are paying 1pc Gain Tax at the time of transferring the property and 2pc by the ‘Non Filers’, it is suggested that for ‘Filer’ it should be reduced to .25% (Point Two Five Percent) and for non filer it should remain 2pc.

It is suggested that strong measures/announcement from prime minister should be made to further boost the prevailing real estate sector, he said. In this regard, membership fee, transfer fee, possession/site plan charges, etc, must be reduced at least 50pc by transferring/registration authorities/societies like CDA/LDA/KDA/Bahria Town/DHAs, etc.

The construction package, which is ending on 30-June-2021, should be extended for at least 1 year till 30-June-2022, as lot of activity due to this package has started gaining momentum, thus resulting in benefits to the general public likely in next financial year.

"We were demanding since long that in Pakistan there should be a some regulator/real estate council or real estate management board for real estate sector," Ahsan Malik said. "Recently, the government has passed Real Estate Regulatory Authority (RERA) Bill-2020 from National Assembly and Senate for Capital Territory only, but still it is not implemented. If it is implemented, then at least 70 to 80pc issues of real estate sector will be settled. There is a dire need of formulation of RERA and its proper implementation just on lines of other developed countries. Such a step by the government will facilitate in removing different hurdles in real estate sector."