Islamabad, Pakistan – The head of Pakistan’s Federal Board of Revenue (FBR), Rashid Mahmood Langrial, has publicly dismissed any possibility of a tax amnesty program for property transactions. This firm denial comes amidst ongoing discussions and recommendations from a government task force aimed at revitalizing the real estate sector.
In a recent televised interview, Langrial addressed swirling speculation about potential income disclosure relaxations for property investments. He stated unequivocally, “There is no discussion at any level to grant any relaxation in the disclosure of income for the purchase of immovable property. Allowing such a relaxation would essentially amount to an amnesty.” He emphasized that this topic has not even been raised within Prime Minister’s task force meetings.
Langrial’s strong stance counters reports suggesting that the task force has proposed a significant waiver – up to Rs 50 million – on wealth reconciliation requirements for investments in real estate and construction. This proposal has triggered concerns that it could inadvertently create an amnesty-like scenario for property deals, despite the FBR’s official position.
While firmly rejecting amnesty, the FBR chief acknowledged the burden of high tax rates currently imposed on property transactions. He confirmed that the revenue authority is actively exploring the reduction of advance tax rates on property sales and purchases. This move, he explained, is intended to encourage greater transparency and improve tax compliance within the sector.
The government task force has put forward a series of broader recommendations aimed at overhauling the property tax regime. Key proposals include:
- Abolishing Section 7E of the Income Tax Ordinance, 2001: This section is perceived as complex and potentially hindering investment.
- Eliminating the Capital Value Tax (CVT) in Islamabad: Removing this tax specifically in the capital territory is seen as a way to stimulate the local market.
- Regular Property Valuation Updates: The task force suggests updating property valuations every three years to ensure they are more closely aligned with current market values. This aims to improve fairness and accuracy in taxation.
- Targeted Transaction Tax Exemptions: To promote specific sectors and support vulnerable groups, the task force has proposed exemptions from transaction taxes for low-cost housing projects, government-allocated plots, and first-time homebuyers.
Despite these proposed reforms, the FBR remains resolute in its opposition to any form of property amnesty. Langrial reiterated that the FBR’s core objective is to broaden the tax base and enhance transparency within the real estate sector through streamlined policies and improved compliance mechanisms, rather than relying on amnesty schemes.
The contrasting positions – the FBR’s firm rejection of amnesty and the task force’s reform recommendations – highlight the ongoing debate on how best to navigate the complexities of property taxation in Pakistan. While the FBR prioritizes robust tax collection and discourages amnesties, the task force appears to be leaning towards stimulating the real estate market through targeted incentives and a simplified tax structure. The coming months will likely reveal which approach ultimately shapes Pakistan’s property tax landscape.
