Property evaluation mechanism applicable from 2006

SBP appoints panel of evaluators to compare property deals of non-filers in last 10 years and of filers in last five years with market prices

ISLAMABAD: The new evaluation mechanism for immovable property – to come into effect from July 1 – under Section 68 of the Income Tax Ordinance 2001, is a procedural law and therefore it would also be applied to the previous deals concerning such property.

It would apply to non-filers for their buying/selling of immovable property during the last 10 years and to filers for their deals in the last five years. The mechanism for this evaluation is simple under which the commissioner (inland revenue) concerned would refer all the deals of immovable property (also from the past) to the panel of evaluators appointed by the State Bank of Pakistan (SBP).

This mechanism would help get 35 per cent tax and an equal amount of fine from the people who have invested billions of dollars of black money in property, while they may also face up to two years imprisonment.

There was a bullish trend in the Pakistan Stock Exchange on Wednesday and Thursday after this news appeared in The News, Jang and Geo News on June 29, at a time when there is a worldwide negative mood after the Brexit referendum.

The reasons the Pakistan stock market brokers give for a bullish market are that people would take out money from their immoveable properties to buy shares; they would invest in industry and trad, which would enhance the country’s gross domestic product (GDP) swiftly. It would shift money from the black economy (informal) into the legal or formal economy. This is quite evident from the bullish trend at the Pakistan Stock Exchange. The Nawaz government’s decision in this regard has been widely appreciated by tax experts, chartered accountants, and the patriotic business community.

According to senior government officials, the new mechanism would help the FBR fetch additional taxes worth billions of rupees, and it would also help enforce the FBR’s writ in the country. They believe that it would also help implement a fair and equitable taxation system in a real sense in the country. Earlier, the tax-evaders had been continuing to invest their capital in immoveable properties including plots, houses, flats, shops, plazas etc, without paying taxes. This was resulting in the closure of industries, reduction of job opportunities, and an increase in the size of the black economy.

A State Bank of Pakistan official said that the commissioner (inland revenue) concerned would refer all the deals of immovable property (also from the past) to the panel of evaluators appointed by the State Bank, which would decide cases in a one-month time period.