ISLAMABAD: More than Rs290 billion worth of black money have been whitened in just three months of the realty sector’s tax amnesty scheme as the people paid Rs877 million in taxes.
More than half of these transactions were carried out in Karachi. About one-fourth of property transactions took place in Lahore and roughly one-third each in Islamabad and Hyderabad.
The Federal Board of Revenue (FBR) received Rs877.3 million in taxes under Section 236-W of the Income Tax Ordinance from July through September, according to official statistics. The section had been inserted in the law in December last year to give legal cover to the tax amnesty scheme for the realty sector.
Under the law, the sellers and buyers of real estate can get their immovable assets legalised by paying a nominal 3% penalty as advance income tax, according to the Income Tax Ordinance that the PML-N government got passed from parliament in December last year.
After paying 3% of the transaction value, these people are allowed to incorporate hidden wealth into the books of accounts.
On the basis of tax payments of Rs877 million, independent tax experts have estimated that the sellers have legalised roughly Rs292 billion worth of black money. These transactions were carried out by the sellers and if the value of buyers’ transactions is included, the amount will rise 100%.
At the standard 30% income tax, the FBR lost Rs87 billion in revenues on the amount that the people legalised by opting for the amnesty scheme, excluding the penalty that is 100% of the payable tax.
The largest amount of Rs150 billion was legalised in Karachi where people paid Rs452 million in taxes under Section 236-W from July through September of the current fiscal year.
Lahore was the second major city where people declared roughly Rs75 billion worth of property by depositing a meagre Rs227 million in the kitty.
Islamabad was the third city where people declared Rs31 billion worth of real estate, bearing a cost of Rs94.4 million followed by Hyderabad where roughly Rs26 billion was legalised by paying Rs79 million in taxes.
