ISLAMABAD: The Federal Board of Revenue (FBR) has decided to establish the ‘directorate of immovable property’ in order to enable the transfer of land on the open market rate.
The government has inserted a new provision 230F in the Income Tax Ordinance 2001 which stated that the tax department will establish a Directorate of Immovable property.
One official told that government is going to end DC rate of provinces from the next fiscal year and the tax department is negotiating with provinces on this matter.
Currently, the tax officials have not been able to agree on an open market rate for immovable properties. If the provinces agree, then the tax department will end the FBR’ rate of property from the next fiscal year.
The official told that the FBR has introduced a one per cent withholding tax on immovable property and this would be adjustable.
The directorate shall consist of a Director General (DG) and as many Directors, Additional Directors, Deputy Directors, and Assistant Directors who will initiate proceedings against those people who will not disclose the purchasing and selling rate of their land.
“The acquisition of property for the reasons to believe that any immovable property of a fair market value has been transferred by a person to another person in less than the fair market value of the immovable property in order to avoid or reduce the withholding tax obligations, concealment of unexplained amount, and avoidance or reduction of capital gains”
The official said that if these proposals become the law than the non-filer cannot purchase land exceeding from Rs4 million and the filer has to show the original value of land, and if he does not show that, the tax department will confiscate the property by paying the double rate.
The Prime Minister had instructed FBR to prepare a mechanism regarding the immovable property. He had stated that if someone purchases a property exceeding Rs4 million and he does not show the actual price, then the tax department will confiscate the property after paying the double market value rate.
Documents indicate that the Directorate General may appoint any valuer or expert as it considers necessary for the purposes of determination of valuation including a fair market value of an immovable property. The valuation made by the transferee under and reasons that consideration is less than the fair market value shall be recorded in writing.
“No proceedings shall be initiated in respect of any immovable property after the expiration of a period of six months from the end of the month in which the instrument of transfer in respect of such property is registered, recorded or attested”, Under the new law.
Documents further indicate that the proceedings shall not be initiated unless the transferee is provided with an opportunity of being heard and where the objection by the transferee, if any, is rejected by the Directorate-General, it shall record in writing the reasons for rejection through an order.
If the Directorate General is satisfied with the objections or reasons furnished by the transferee or the transferor, it shall, by order in writing, declare that the property shall not be acquired under this section.
There shall be established an Appellate Tribunal of Immovable Property to exercise the powers conferred on the Tribunal under this section.
