ahlam1399
06-30-2016, 02:40 PM
Amendment in Income Tax law
ISLAMABAD: The latest amendment in the Income Tax law will check tax evasion of billions of rupees besides checking the whitening of black money worth trillions of rupees every year as loopholes in the system have been allowing undervalued sales and purchase of thousands of residential and commercial properties throughout the country every day.
The latest move for market rate evaluation of properties in the sale/purchase transfers will bring an end to the prevalent bad practice of the federal and provincial authorities who are graciously allowing the sale and purchase of properties, both commercial and residential, at extremely undervalued rates to the benefit of tax evaders.
The News had recently highlighted this major scandal where massive tax evasion as well as the whitening of black money is facilitated by the federal as well as provincial governments. It was highlighted by this newspaper that this is generally accepted practice of all the provincial registration ******s as well as the CDA, DHA and other private housing societies.
Most of these sales and purchases are based on official rates, also k**wn as DC (Deputy Commissioner) rates, which are far lower than the actual market prices of these properties.
During the last two years’ budgetary preparation exercise, the FBR had been proposing the enactment of “Pre-emption Law” to check this huge corruption of tax evasion and whitening of black money. However, this year an important amendment has been made to Section 68 of the Income Tax Ordinance 2001 through the Finance Act 2016, which will be effective from July 1.
Under the amendment, the property evaluation rate set by the provincial governments will ** longer remain relevant. After that, all investors will have to get their properties evaluated through the valuers of the State Bank of Pakistan (SBP) under a new mechanism.
The undervalued sales and purchases of the properties deprive the government of actual CVT and withholding tax, which if calculated on original price, goes into hundreds of billions of rupees every year.
Such dealings, which have had the blessings of the federal and provincial authorities, give a great opportunity to tax evaders and black money holders to whiten their money by investing more but showing much less on real estate.
The News inquiries from authorities concerned had revealed that in an ordinary sale of a house in Islamabad, the government is deprived of over Rs1 million tax. For example, a CDA source said generally the declared worth of Rs100 million house in a Islamabad sector is around Rs30 million.
The government imposes 2 percent CVT and 2 percent withholding tax (on **n filers) or one per cent withholding tax (on taxpayers). It means instead of paying Rs4 million as CVT-withholding tax, a little over Rs1 million is paid because of undervalued declaration.
In the case of commercial properties, the tax evasion goes really high.
The FBR is in the k**wledge of the fact that in Sector F-6 and F-7 of Islamabad, the DC rate of one kanal plot is merely Rs10 million whereas the market price is around Rs100 million. In such cases of sales and purchases, more than Rs3 million tax is evaded but because of the DC rates, the FBR could **t do anything.
The FBR has also been approaching the provincial governments to revise the DC rates in order to bring them parallel or close to the market rates so that the massive tax evasion could be stopped. However, the provinces never showed any interest in cooperating in this critically important task.
The DC rates whether in Karachi, Lahore, Islamabad, Peshawar or in any other part of the country are 10-20 per cent of the actual value of the property. It helps the holders of black money and tax evaders to legalize their millions and billions with the complete support of government authorities.
Generally, the buyers, who mostly benefit from DC rates to evade tax and whiten their black money, sign two sets of agreements with the seller. One of these agreements carries the actual price whereas the other agreement shows the sale of property at the undervalued rate. The first agreement is meant for the two parties to avoid any fraud whereas the second agreement is shown to the registration authorities for transfer of property on undervalued rate.
http://feeds.feedburner.com/~r/com/cwEr/~4/etn3PAe_XQQ
أكثر... (http://feedproxy.google.com/~r/com/cwEr/~3/etn3PAe_XQQ/131807-Govts-tax-evasion-facilitation-to-be-checked)
ISLAMABAD: The latest amendment in the Income Tax law will check tax evasion of billions of rupees besides checking the whitening of black money worth trillions of rupees every year as loopholes in the system have been allowing undervalued sales and purchase of thousands of residential and commercial properties throughout the country every day.
The latest move for market rate evaluation of properties in the sale/purchase transfers will bring an end to the prevalent bad practice of the federal and provincial authorities who are graciously allowing the sale and purchase of properties, both commercial and residential, at extremely undervalued rates to the benefit of tax evaders.
The News had recently highlighted this major scandal where massive tax evasion as well as the whitening of black money is facilitated by the federal as well as provincial governments. It was highlighted by this newspaper that this is generally accepted practice of all the provincial registration ******s as well as the CDA, DHA and other private housing societies.
Most of these sales and purchases are based on official rates, also k**wn as DC (Deputy Commissioner) rates, which are far lower than the actual market prices of these properties.
During the last two years’ budgetary preparation exercise, the FBR had been proposing the enactment of “Pre-emption Law” to check this huge corruption of tax evasion and whitening of black money. However, this year an important amendment has been made to Section 68 of the Income Tax Ordinance 2001 through the Finance Act 2016, which will be effective from July 1.
Under the amendment, the property evaluation rate set by the provincial governments will ** longer remain relevant. After that, all investors will have to get their properties evaluated through the valuers of the State Bank of Pakistan (SBP) under a new mechanism.
The undervalued sales and purchases of the properties deprive the government of actual CVT and withholding tax, which if calculated on original price, goes into hundreds of billions of rupees every year.
Such dealings, which have had the blessings of the federal and provincial authorities, give a great opportunity to tax evaders and black money holders to whiten their money by investing more but showing much less on real estate.
The News inquiries from authorities concerned had revealed that in an ordinary sale of a house in Islamabad, the government is deprived of over Rs1 million tax. For example, a CDA source said generally the declared worth of Rs100 million house in a Islamabad sector is around Rs30 million.
The government imposes 2 percent CVT and 2 percent withholding tax (on **n filers) or one per cent withholding tax (on taxpayers). It means instead of paying Rs4 million as CVT-withholding tax, a little over Rs1 million is paid because of undervalued declaration.
In the case of commercial properties, the tax evasion goes really high.
The FBR is in the k**wledge of the fact that in Sector F-6 and F-7 of Islamabad, the DC rate of one kanal plot is merely Rs10 million whereas the market price is around Rs100 million. In such cases of sales and purchases, more than Rs3 million tax is evaded but because of the DC rates, the FBR could **t do anything.
The FBR has also been approaching the provincial governments to revise the DC rates in order to bring them parallel or close to the market rates so that the massive tax evasion could be stopped. However, the provinces never showed any interest in cooperating in this critically important task.
The DC rates whether in Karachi, Lahore, Islamabad, Peshawar or in any other part of the country are 10-20 per cent of the actual value of the property. It helps the holders of black money and tax evaders to legalize their millions and billions with the complete support of government authorities.
Generally, the buyers, who mostly benefit from DC rates to evade tax and whiten their black money, sign two sets of agreements with the seller. One of these agreements carries the actual price whereas the other agreement shows the sale of property at the undervalued rate. The first agreement is meant for the two parties to avoid any fraud whereas the second agreement is shown to the registration authorities for transfer of property on undervalued rate.
http://feeds.feedburner.com/~r/com/cwEr/~4/etn3PAe_XQQ
أكثر... (http://feedproxy.google.com/~r/com/cwEr/~3/etn3PAe_XQQ/131807-Govts-tax-evasion-facilitation-to-be-checked)