The tax consultants/advisors of the Federal Board of Revenue (FBR) have strongly recommended imposition of a nominal non-refundable transfer tax on all transactions (sale/purchase) of immovable property after getting authorisation from provincial governments or restrict sale/purchase or transfer of title of immovable property till seller obtains ''No objection certificate'' (NOC) from the FBR.
Sources told Business Recorder here on Monday that the FBR is planning to set up a Central Third Party Data Collection Unit and Data Warehouse for maintaining national database of third party. In order to document all transactions of buying and selling of immovable property for documentation purposes, the FBR is reviewing different options presented by tax advisors hired for broadening the tax base.
One of the important sources of third party data included registration authorities in all districts including those responsible for registering the sale deeds, Real Estate Developers (DHA, Housing Societies, those responsible for registering the transfer of title other than registered sale deeds, patwaris responsible for transfer of title are also sources of data.
The proposed solution, to start with, is to impose a restriction on registration of sale/purchase or transfer of title of immovable property unless supported by an NOC issued by the Central Third Party Data Unit. The options for issuing such a certificate are: The FBR can depute staff of one or two members with a computer and on-line connectivity with the Central Third Party Data Unit at office of each such authority to issue the NOC. The second option is that in the Tax Facilitation Centre of each Large Taxpayer Unit/Regional Tax Office (RTO) (which already has computers and on-line connectivity) a facility should be available for the issuance of the NOC.
Alternatively, another solution is to impose a nominal non-refundable transfer tax of say 0.25 percent on all transactions of sale/purchase of immovable property, with the consent of the provincial governments and with an undertaking by the federal government to transfer the proceeds to the respective provincial governments, to be deposited by the purchaser with his full particulars ie CNIC/NTN, name and address as per procedure laid down for deposit of income tax from where the data can be transferred to the Central Third Party Data Warehouse, FBR report added.
When contacted, a tax expert said the NOC from the FBR would ensure that every person who intends to sell property would not be able to sell the same till he files the income tax return as well as the wealth statement with the tax department. The FBR can issue the NOC to only those sellers of property who would declare the details of property including its actual value in the wealth tax statement. In his wealth statement, owner of the property would submit basic details of the property particularly its actual value. Unless or until the seller submits the wealth statement, the FBR will not issue the NOC to the concerned person. This NOC may be required at the time of transfer of property. Without the NOC of the FBR, the provincial registration authorities or property transferring authorities should not carry out the transaction regarding the transfer of property, the experts added.
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