Purchase of property thru non-banking transactions: Buyers and sellers will face penalty

ISLAMABAD: After heavy taxation on buying/selling of immovable properties and increase in Federal Board of Revenue’s (FBR) property values, citizens would now face a new kind of problem in the name of penalty to be recovered from property purchases made through non-banking transactions.

A real estate expert, Muhammad Ahsan Malik told Business Recorder that the issue is related to the collection of penalty chargeability under Income Tax Ordinance 2001 on purchase of property through non-banking transactions.

The real estate analyst stated that this is a new kind of problem being faced by the buyers and sellers of immovable properties.

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He referred to a letter of Board of Revenue of Punjab addressed to the Registrar Cooperative Societies, Punjab and Director General, Punjab Land Records Authority and District Registrars, Deputy Commissioners in the Punjab.

Muhammad Ahsan Malik informed that under Section 75A of the Income Tax Ordinance, 2001 read with entry no 21 of Chapter X, a penalty at the rate of five per cent shall be charged in case of purchase of property through non-banking transaction if the value of immovable property having fair market value is greater than five million rupees or any other assets having fair market value more than one million rupees.

During pre-PAC meeting held under the chairmanship of Senior Member, Board of Revenue, Punjab to review the progress of compliance on proposed draft paras, it was observed that the sub-registrars, assistant directors Land Records and transferring officers as withholding agents have not collected the penalty on non-banking transactions.

The concerned authorities showed their displeasure over non-recovery of penalty on such transactions and directed to circulate instructions to all the field formations to collect the requisite penalty.

He further referred to the Board of Revenue of Punjab’s letter that the instructions have been issued to all the sub-registrars, assistant director Land Records and transferring/ attesting officers working under respective jurisdictions to collect the penalty in case of non-banking transaction as per cited law. In case of failure to collect the penalty chargeable on non-banking transactions the concerned transferring attesting officer shall be responsible, Muhammad Ahsan added.

Copyright Business Recorder, 2024