KARACHI: The Federal Board of Revenue (FBR) has been advised to reduce the tax rate for documenting investments in real estate business and to increase the revenue collection.
The government has provided relief to document undeclared money through investment on purchase of immovable properties under Section 236W of Income Tax Ordinance, 2001. The prevailing tax rate is three percent on purchase value under valuation tables defined by the FBR.
Association of Builders and Developers (ABAD) in its 2018/2019 budget proposals sent to the FBR recently stated that property valuation had increased manifold resulting in high cost of transactions.
It suggested that withholding tax rate of three percent should be reduced to one percent as this tax was not adjustable, which would reduce the burden on the taxpayers.
Alternatively, the ABAD recommended that taxpayers should be given an option to declare property at fair market value by giving one percent or pay three percent at FBR values.
Section 236W of the ordinance was implemented on December 2, 2012 as an amnesty for whitening the undeclared money on investment made into real estate.
