Islamabad: The Federal Board of Revenue (FBR) has introduced a new penalty targeting non-banking transactions in property deals, creating further challenges for buyers and sellers of immovable assets. The move comes amid stringent measures, including increased property valuations and heavy taxation on real estate transactions.
According to real estate experts, the penalty, introduced under Section 75A of the Income Tax Ordinance, 2001, applies to property purchases where payments are made outside the formal banking system. A 5% penalty will be imposed if the fair market value of the immovable property exceeds PKR 5 million or, in the case of other assets, PKR 1 million.
The directive has been communicated to relevant authorities in Punjab, including the Registrar Cooperative Societies, the Director General of Punjab Land Records Authority, and district registrars. These officials, acting as withholding agents, are now responsible for ensuring the recovery of penalties on non-banking property transactions.
During a pre-Public Accounts Committee (PAC) meeting chaired by the Senior Member of the Board of Revenue, Punjab, it was noted that field officers had failed to enforce penalty collections as required by law. This oversight has prompted instructions to all sub-registrars, assistant directors of land records, and transferring officers enforce the penalty provisions.
Experts believe this directive is likely to impact the real estate market significantly, as buyers and sellers will need to ensure compliance with banking transaction requirements to avoid financial penalties. The FBR’s latest move reflects its ongoing efforts to increase documentation and transparency in real estate dealings.
Authorities have further clarified that failure to collect penalties will result in accountability measures against the concerned transferring or attesting officers. This underscores the government’s intent to curb non-compliance and promote using formal financial channels in property transactions.
The new directive is expected to pressure stakeholders in the property sector, which is already grappling with increasing costs and regulatory challenges.
Samra Zulfiqar, a real estate analyst at Zameen.com, is passionate about finding projects that offer buyers the best returns. Her keen insights spotlight the market’s most promising opportunities.
