KARACHI: The Federal Board of Revenue (FBR) has documented Rs350 billions of investments in the real estate sector under the tax amnesty scheme in the last two and half years, sources said on Friday.
The sources said properties were whitened under the tax amnesty scheme for undeclared money invested in the real estate sector between December 2016 and June 2019.
The government through Income Tax (Fourth Amendment) Act 2016, dated December 12, 2016, introduced a scheme by inserting Section 236W into Income Tax Ordinance, 2001 under which individuals were allowed to pay three percent tax against undeclared money invested in purchase of properties. Later, the scheme was withdrawn through Finance Act 2019, effective from July 1, 2019.
The accumulated tax collection of the FBR under the head was Rs10.52 billion during December 2016 to June 2019.
Official data showed that people got Rs127 billion documented by availing the scheme during the last fiscal year of 2018/19. The FBR collected Rs3.83 billion in FY2019 compared with collection of Rs4.35 billion in the preceding fiscal year, showing a 12 percent decline.
The figures showed that people got around Rs145 billion whitened under the scheme in 2017/18. Meanwhile, the FBR collected Rs2.34 billion during the period (December 2016 – June 2017) on Rs78 billion of investment in real estate sector.
The FBR said every individual, as per the section 236W and related provisions of undisclosed assets, responsible for registering, recording or attesting transfer or any immovable property is required to collect tax at the rate of three percent of the difference between the FBR value of property and the value recorded by the authority registering or attesting the transfer in cases where FBR value was greater than the recorded value.
“So by paying three percent of the difference, the purchaser was not required to explain the source of difference of amount between FBR value and the recorded value,” the FBR said in a statement.
The FBR further said the section 236W as well as sub-section (4) of section 111 have been omitted through Finance Act 2019.
“Consequently, the purchasers are now required to explain the source of investment of property up to the FBR’s value of property whereas previously such purchasers were required to explain the source of investment to extent the recorded value of property,” the FBR added.
FBR sources said the highest amount of Rs39 billion was whitened within the jurisdiction of Regional Tax Office (RTO)-III, Karachi in 2018/19 as the tax office collected Rs1.17 billion as income tax on transactions of properties under the head.
It was followed by RTO Lahore, which collected Rs687 million during the fiscal year under review, as people within the jurisdiction of the tax office whitened around Rs23 billion during the fiscal year.