Federal Board of Revenue (FBR) has exposed a massive withholding tax (WHT) evasion scam involving property registrars, revenue officers, and lawyers in Punjab, who collected WHT on property transactions worth billions but never deposited them in the national exchequer.
According to a report by BR, the FBR’s Regional Tax Office (RTO) in Sargodha conducted an electronic audit of property registrars in Punjab and found that they had retained the deducted WHT on immovable property transactions instead of forwarding them to the designated accounts of the FBR. The RTO also discovered that the property registrars had issued fake tax challans to evade the authorities and applied lower WHT rates for non-filers.
The RTO has initiated recovery proceedings and prosecution against the involved persons under the enforcement provisions of the Income Tax Ordinance 2001. So far, the RTO has recovered over Rs388 million from the defaulters.
The detection of the revenue leakage on account of WHT on purchase/sales of properties pointed towards serious efforts to recover such evaded amount by the organized gangs of property registrars if operating in other cities. If the FBR could be able to detect similar kind of revenue leakage in WHT collection in other RTOs, it can easily surpass its revenue collection targets of the remaining months of 2023-24.
The collection of WHT on immovable properties is a major revenue contributor in the FBR’s direct taxes collection. From July 1, 2023, the rates of WHT under sections 236C and 236K of the Income Tax Ordinance 2001 were substantially increased. The WHT collection from sales of immovable properties recorded the highest growth of around 340.5 percent during 2022-23 as compared to 2021-22.
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