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FBR forms separate directorate for immovable properties to curb tax evasion, check valuation

FBR forms separate directorate for immovable properties to curb tax evasion, check valuation

ISLAMABAD: Federal Board of Revenue (FBR) notified establishment of a separate Directorate General Immovable Properties-IR in order to check valuation and tax evasion in property transactions.

The FBR said that in pursuance of section 230-F of Income Tax Ordinance, 2001 (inserted through Finance Act 2018) a new IR field formation namely DG IMP has been raised.

The said section also provides definitions for all implied terms and expressions, the scope, operational mechanics and procedural parameters of this newly created tax authority and above all contains clearly spelled grievance redressal mechanism for the aggrieved taxpayers.The Directorate General IMP-IR shall comprise of DG IMP based at Islamabad and 03 Directors IMP-IR i.e.;

Director IMP-IR North, based at Islamabad, covering KPK, ICT and Civil Division of Rawalpindi, Punjab province

Director IMP-IR Central, based at Lahore, covering the whole province of Punjab except civil Division of Rawalpindi

Director IMP-IR south based at Karachi covering the provinces of Sindh and Baluchistan.

  1. For the time being DG BTB and Commissioners BTB Islamabad, Lahore and Karachi shall be assigned the additional charges of these newly established offices and each Regional Directorate shall be housed at existing BTB Zones at Karachi, Lahore and Islamabad.

iii. DG IMP and each Regional Director shall be assisted by one or more dedicated units headed by ACIR/DCIR.

Legal Functions: Directorate General IMP-IR

Legal functions shall be notified later, in the light of sub-section (2) of section 230F which says “The Board may, by notification in the official Gazette, specify the functions and jurisdiction of the Directorate-General and its officers”.

“Formal legal operations shall start in the light of 230 F(22) which reads, “The provisions of this section shall come into force on such date as the Federal Government may, by notification in official Gazette, appoint;”

Job Description: DG and Directors IMP-IR

In addition to the mandate assigned through section 230F of Income Tax Ordinance, 2001 Directorate General IMP-IR shall act as FBR’s specialized agency on all matters relating to real estate/immovable properties i.e.;

  1. Open plots, constructed properties both residential commercial & industrial, agricultural lands, housing schemes/projects/societies/ towers/chains of luxury apartments and other related similar assets.
  2. Real Estate classification in respective jurisdictions;

Office Building: Urban and suburban, skyscrapers, high rise buildings, single tenanted/multi tenanted.

Retail: properties that house the retailers and restaurants and food outlets-multi-tenanted/standalone buildings.

Industrial: Industrial buildings house industrial operations i.e. heavy manufacturing, light assembly, bulk warehouse, flex industrial (both industry and offices) and research & Development. Mostly located outside of urban areas, especially along major transportation routes.

Multifamily: covers apartments, condos, co-ops, and townhomes, High Rise, Mid Rise, Garden Style and special purpose housing (particular population segment, including student housing, seniors housing, and subsidized (either low income or special need) housing)

Hotels: This sector covers;

— Establishments providing accommodations, meals, and other services for travelers and tourists. It includes independent (boutique) or flagged—(part of a major hotel chain, such as a Marriott or Sheraton)

— Extended-stay: Limited-service with fully equipped kitchens in guest rooms and larger rooms for long stays.

— Resort: Full-service, large amount of land, in a typical resort location and has an attached golf course, water park, or amusement facility

Special purpose special purpose real estate may be owned by commercial real estate investor i.e. amusement parks, self-storage, and Conference Rooms etc.

iii. Real estate builders, marketing entities, brokers, architects, consultants, interior designers and all other related services providers.

  1. Geo mapping of immovable properties:

— Digitized property mapping and Geo-referencing based on digitized survey

— Photogrammetric, a method of mapping based on aerial information.

  1. Valuation of immovable properties: Roping in private valuers, periodic indexing of valuation, up-dation based on market survey
  2. Tracking online marketing of immovable properties

vii. Mapping of rented properties (all kinds) at major urban centers, industrial estates, Zones and areas.

viii. Tracking operations of foreign real estate concerns in Pakistan

  1. Real Estate metrics to gauge the health of the real estate sector.
  2. Real Estate Investment Trusts: “portfolios of properties whose stock prices investors frequently use to determine and analyze industry trends.”
  3. Liaison with provincial Excise & Taxation and Land Revenue authorities for coordinated operations

xii. Input to IR Policy and Operations wings with reference to real estate sector

xiii. Survey and market analysis of real estate Market Segments i.e. geography, property type, ownership type and occupier/ tenant type.

xiv. Real Estate financing and insurance: tools & documentation with special reference to taxation regime.

  1. Forensic analysis of Tax evasion prone areas in Real estate, especially pilferage in withholding tax collection in real estate related transactions
  2. Directorate General IMP: Operations

In the light of aforesaid JDs Directorate General IMP shall start its following operations immediately after its launch;

  1. Identification of high end properties on sale and Rent: Through internet navigation focusing real estate specific websites.
  2. Discreet Video Surveys of new & upcoming real estate projects.

iii. Linkages with provincial Revenue & Excise authorities.

  1. Development of SOPs for different segments of JDs.
  2. Generation of Discrepancy Reports in the cases of registered as well as un-registered cases.