The Punjab Revenue Authority (PRA) has introduced measures aimed at addressing the longstanding issue of tax evasion within Lahore’s real estate sector. With a focus on the DHA area, the authority seeks to increase tax collection and meet revenue targets by targeting property developers, builders, property dealers, and property commission agents, Profit learnt here on Thursday.
According to details, high-ranking officials from the PRA, including the Additional Commissioner and Enforcement Officer, recently visited the Defence Housing Authority (DHA) in Lahore. During a meeting with the DHA Secretary at the headquarters of DHA, the officials discussed strategies to combat tax evasion and sought cooperation from the DHA in ensuring compliance with tax regulations.
To expand the scope of tax collection, the spokesperson for the PRA informed about the plans to identify multiple locations where tax targets will be enforced.
The Chairman PRA further said that no leniency would be given to those who fail to pay sales tax on services throughout Punjab.
“The implementation of these initiatives is expected to not only achieve tax targets but also expedite the completion of public welfare projects through increased tax revenue,” he said.
It is pertinent to mention here that the real estate sector in Pakistan, including Lahore, has long grappled with tax evasion issues, resulting in significant revenue losses for the government.
In a recent speech the Defense Minister Khawaja Asif highlighted that tax evasion in the real estate sector alone amounts to an estimated Rs 500 billion. Furthermore, the real estate sector plays a vital role in generating employment opportunities, both directly and indirectly.
One of the major contributors to tax evasion in the real estate sector is the lack of a comprehensive documentation system. Many property transactions are conducted in cash, enabling individuals to evade taxes easily. In response, the government has previously introduced a tax amnesty program and promised to establish a more transparent system. However, these efforts have met with limited success so far.
According to the Pakistan Institute of Development Economics (PIDE), the real estate market in Pakistan remains one of the largest and fastest-growing sectors of the economy. The State Bank of Pakistan (SBP) reported that the real estate sector contributed approximately 2% to the country’s GDP in 2021, with an estimated value of PKR 5.2 trillion. Despite facing a slight slowdown due to the COVID-19 pandemic in 2020, the sector has exhibited consistent growth over the years, with an average annual growth rate of 4.2% from 2011 to 2019.
