NA Panel Supports FBR’s Crackdown on Black Money in Pakistan Real Estate
February 1, 2025
Introduction
The Finance and Revenue Committee of the National Assembly in Islamabad has approved the efforts made by the Federal Board of Revenue (FBR) to combat the issue of black money in the real estate sector. They have also established a sub-committee to assess a proposed tax amendment bill in consultation with relevant parties.
1. FBR Collaborates with ABAD
MNA Naveed Qamar, as the chairperson, led the committee meeting which discussed the Tax Laws (Amendment) Bill 2024. A sub-committee was formed to address the concerns and conflicts between the FBR and stakeholders regarding the bill.
According to the guidelines, the sub-committee’s responsibility is to guarantee that the Revenue Division collaborates with the Association of Builders and Developers (ABAD) in order to establish the amount and timeframe for qualification. The sub-committee will deliver its findings within 10 days, and the initial session is planned for Thursday (Jan 23) to identify any potential factors that could affect the real estate market.
2. FBR's Authority to Enhance Tax Compliance in Real Estate
According to Ali Pervaiz Malik, the State Minister for Finance and Revenue, the bill will grant FBR the authority to enhance tax compliance and incorporate the unregistered sector into the tax system. He noted that the past administration failed to address the concerns of non-filers for 75 years. However, he assures that the current government is dedicated to resolving this issue.
A sub-committee has been formed in order to address the concerns of stakeholders.
3. New Tax Legislation Limits Property Purchases for Non-Taxpayers, FBR Cracks Down on Tax Evasion"
According to the state minister, individuals who are not registered as taxpayers will be limited from purchasing properties, vehicles, or making investments in businesses or the stock market under the new legislation. However, those with lower income will not be affected by these restrictions. The committee was informed that approximately half of Pakistan’s economy is dependent on unreported income. As a result, the tax authorities have been given the authority to hire 1,600 auditors to monitor non-filers and ensure that they comply with tax regulations for their financial activities.
According to the FBR Chairman, Rashid Mahmood Langrial, the modifications aim at cracking down on wealthy individuals (who evade taxes) and companies. He further stated that those who are not registered as taxpayers will only be allowed to acquire properties worth up to Rs10 million.
According to his statement, there is a significant underreporting of the sales tax, with only 42,000 individuals having submitted their sales tax returns. Numerous enterprises are hesitant to register for the sales tax system.
3. FBR Granted New Powers to Tackle Tax Fraud
The recently implemented legislations will also provide FBR officials with extra authority, such as the ability to halt transactions related to undisclosed funds and tax fraud. The speaker also mentioned that the suggested legislation includes provisions to hire 1,600 auditors in order to bolster revenue enforcement.
- The committee raised worries regarding certain suggested changes. The members highlighted difficulties concerning prevalent corruption and capacity limitations within the FBR. They also noted grave economic consequences for the nation.
- The importance of boosting total tax revenue and improving the enrollment of taxpayers in the system was stressed by Mr Qamar. He also instructed the FBR chairman to tackle the disputes in the legislation and present suggestions to minimize the bill’s economic repercussions on the nation.
- The speaker encouraged the finance department to ensure the trust of all parties involved and rectify any discrepancies.
- The publication date of this article is January 22nd, 2025 as stated in the Dawn newspaper.
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