FBR amends Income Tax Rules to fully document Real Estate sector
ISLAMABAD - The Federal Board of Revenue (FBR) has proposed changes to completely document the businesses of real estate agents and jewellers.
In order to comply with the Financial Action Task Force’s (FATF) requirements, FBR issued draft amendments to Income Tax Rules 2002 for ensuring documentation of real estate agents and jewelers.
The board has issued special instructions regarding account books, documents, and records maintained by real estate agents/jewelers and reporting of suspicious transactions. They will now be required to maintain records of actual beneficial owners of immovable properties and jewelry and report all suspicious transactions of their buyers/sellers to the FBR.
It is pertinent to mention here that the FATF teams were concerned that the real estate and jewelry sectors are totally undocumented and can become tools of money laundering and terror financing in Pakistan.
According to the FBR, the jewelers and real estate agents (named as designated persons or DPs) are to keep a record of transactions where the value of the transaction, inclusive of all applicable taxes, duties, rates, and cess exceeds, Rs. 2,000,000 in case of immovable property and Rs. 1,000,000 in other cases.
Under the monitoring and compliance provisions, the record to be maintained and furnished by the real estate agents/jewelers shall be subject to spot inspection by income tax authorities who may be assisted by other law enforcement agencies. If the record is not maintained in the prescribed form, the business license of the real estate agents/jewelers shall be suspended, pending further investigation into the matter.
If the real estate agents/jewelers fail to comply with any of these rules, they shall be liable to penalty under Part X and prosecution under Part XI of Chapter X of the Income Tax Ordinance.
On the conclusion of the investigation, the officer may submit a report to the commissioner and make recommendations, regarding, cancellation or reinstatement of the business license. He may refer the matter to specialized external investigating agencies for further investigation under their respective laws.