21st Century Real Estate

Immovable property transfer: builders seek amendment to Finance Act for lifting ban

Immovable property transfer: builders seek amendment to Finance Act for lifting ban

BUSINESS RECORDER REPORT JAN 15TH, 2019
ISLAMABAD

The developers and builders community is seeking amendment to the Finance Act 2018 through Finance Supplementary (Amendment) Bill 2019 for lifting ban on the transfer of immovable property to non-filers of income tax returns or increase in the limit of Rs 5 million to Rs 10 million for non-filers and change in income tax collection mechanism.

Muhammad Arif Yousuf Jeewa, former chairman of the Association of Builders and Developers of Pakistan (ABAD), told Business Recorder here Monday that so far the government has not approached the stakeholders regarding any amendment relating to the immovable properties.

The ban on transfer of immovable property to a non-filer has greatly affected the business of buying and selling of properties. Most of the transactions are now not taking place having negative affect of buying and selling of immovable properties. One of the proposals is to increase the limit of ban from Rs 5 million to Rs 10 million for non-filers. Secondly, the Finance Supplementary (Amendment) Bill 2019 should lift the ban on the non-filers from purchasing immovable properties, he added.

In order to reinforce efforts being made for broadening of the tax base and to bring about an increase in the number of return filers, a new section 227C was inserted through the Finance Act, 2018 and a restriction was also placed upon authorities responsible for registering, recording or attesting transfer of any immovable property exceeding Rs 5 million and any application or request by a person for registering, recording or attesting transfer of any immovable property exceeding Rs 5 million could not be accepted or processed unless such person was a filer as defined in section 2(23A) of the Income Tax Ordinance.

This restriction resulted in hardship for various categories of persons including low-income earning individuals purchasing motorcycles, etc, and for persons acquiring property through inheritance. Moreover, this measure also negatively impacted non-resident individuals desirous of investing in the real estate sector. In order to alleviate the genuine hardships being faced by various categories of persons, the Finance Supplementary (Amendment) Bill, 2018 envisages the exclusion of certain persons from the purview of section 227C of the Income Tax Ordinance, 2001.

The restriction on purchase/transfer of immovable property having value exceeding Rs 5 million by non-filers shall not apply to legal heirs acquiring property through inheritance. Moreover, as in the case of purchase of motor vehicles, the condition of being a filer shall not apply in respect of persons holding a Pakistan origin card or a national identity card for overseas Pakistanis who are able to produce a certificate from a scheduled bank verifying receipt of foreign exchange remitted from outside Pakistan through normal banking channels during a period of sixty days prior to the date of registering, recording or attesting transfer of immovable property valuing above Rs 5 million.

In order to effectively enforce the bar on purchase of locally manufactured/ imported vehicles and immovable property valuing above Rs 5 million by non-filers, the Finance Supplementary (Amendment) Act, 2018 envisages levy of various penalties upon Excise and Taxation Department and authorities responsible for registering, recording or attesting transfer of immovable properties.

A registering authority of Excise and Taxation Department accepting, processing or registering any application for registration of a locally manufactured motor vehicle or the first registration of an imported vehicle by a non-filer shall be liable to pay a penalty of 3% of the value of the motor vehicle.

If any authority responsible for registering, recording or attesting the transfer of immovable property accepts or processes the registration or attestation of immovable property valuing above Rs 5 million in the case of a non-filer, such authority shall be liable to pay a penalty of 3% of the value of such immovable property. It would also be pertinent to mention that authorities responsible for registering, recording or attesting the transfer of immovable properties include housing authorities, housing societies, cooperative societies, and registrar of properties, etc.

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