FBR collects Rs700mln under amnesty for real estate sector

KARACHI: The Federal Board of Revenue (FBR) has witnessed a phenomenal growth in tax collection from the real estate sector since the announcement of amnesty as the board collected Rs700 million under the scheme in the past three months, officials said on Thursday.

A senior official of the FBR said the people availed the amnesty by disclosing Rs23.3 billion for making transaction of immovable properties between December 7, 2016 and February 2017. The official was unable to quote the actual number of transactions, but estimated that it would be around 18,000.

The National Assembly approved the amnesty for real estate sector on November 30, 2016, granting a person to make investment in immovable property without disclosing the source of the fund.

The parliament; however, restricted the amnesty to the amount, which is a difference between the collector rates fixed by the provincial governments and valuation of immovable properties issued by the FBR.

Under the scheme, a person is allowed to declare the money at three percent tax under the Section 236K of Income Tax Ordinance 2001. The withholding tax on property transactions collected from seller and purchaser also grew staggering 150 percent during the first eight months of the current fiscal year.

The withholding tax collection increased to Rs10 billion in the July-February period of 2016/17 from four billion rupees in the corresponding period of the last fiscal year. The FBR collects withholding tax under Section 236C of the Income Tax Ordinance, 2001 from seller and under Section 236K from purchaser.

The FBR officials attributed the substantial revenue growth to increase in withholding tax rates in the budget 2016/17. Through Finance Act 2016, the withholding tax rates on sale and purchase of immovable properties increased 100 percent. Under the new tax rates on sale of property, a seller, in case of filer, is liable to pay one percent on the gross amount of transaction and two percent in case of non-filer.

Earlier, these rates were 0.5 percent and one percent, respectively. Similarly, for purchasers of immovable properties, the withholding tax rates were revised up to two percent for filer and four percent for non-filer from one percent and two percent.

Published in The News, March 10^th, 2017