The government has announced the federal budget 2019/20 and has announced initiatives for many sectors including property. Government lifted the standstill on the purchase of property worth over Rs. 5 million by non-filers of tax returns. However, it has bolted the window of authorizing black money through investment in real estate in order to allow only genuine property buyers.
These restrictions were imposed by previous government on the registration, entry or transfer of property valued exceeding Rs. 5 million to a non-tax filer. It has been observed that the limit has not achieved the anticipated goal of increasing the number of tax return filers, rather such restriction has been legally challenged in on the point of jurisdiction, Minister of State for Revenue Hammad Azhar stated while presenting the federal budget for 2019/20 in the National Assembly Islamabad.
Consequently, the curb placed on the purchase of the immovable property may be withdrawn,” he told to legislators in the National Assembly.
Minister Hammad Azhar pointed out that if a purchaser of an immovable or fixed property pays 3% tax on the difference between old and lower value and the Federal Board of Revenue’s (FBR) current market property valuations, then he is not required to rationalize the source of investment of the said differential amount at present
The federal government is estimated to have collected Rs. 60-70 billion in property tax. The closure of the window may slash the tax collection by 30-40%, he appraised in the budget speech.
In order to prevent the misapplication, the withholding tax on property purchase is proposed to be collected regardless of the value of the property, Revenue Minister added.
