KARACHI: The Federal Board of Revenue (FBR) has decided to scrutinise again the money trail of investments in real estate sector by developers and builders.
Sources said the set tax regime restrained FBR from undertaking scrutiny of investments made by builders, developers or any others on their behalf.
According to an official at Regional Tax Office (RTO) Karachi, in the fixed tax regime, the builders and developers calculate their amount to be paid on a project and no further questions were asked by tax authorities.
Finance Minister Ishaq Dar, in his budget speech, announced withdrawal of the fixed tax regime for builders and developers from July 1. According to the fixed tax regime, the builders and developers are bound to pay various taxes per square yard/foot, which are variable area to area.
Minister Dar said builders and developers had committed to contribute around Rs28 billion, but so far their contribution was mere Rs110 million. The Association of Builders and Developers argued that under the fixed tax regime around Rs150 million was deposited to national exchequer. The contribution would be around three billion rupees in the next two years, said the association.
Tax officials said the fixed tax regime provided a sort of amnesty to builders and developers because under such regime the tax authorities neither ask questions nor conduct audit of this industry.
The tax official said another major reason behind the withdrawal was introduction of benami laws, which are likely be implemented from the next fiscal year.
