ISLAMABAD: The Federal Board of Revenue (FBR) has expressed serious concern over exceptionally low collection of withholding tax from immovable property transactions where 3 percent of the differential amount between the FBRs prescribed value and the value recorded by the registering authority is required to be collected by registering/attesting authorities.
According to the FBRs instructions issued to the Chief Commissioners of Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) here on Wednesday, it has been observed with grave concern that collection reported under section 236W of the Income Tax Ordinance 2001 in the month of December, 2016 is pathetically low. The proper implementation of this section can only be ensured by conducting in depth audit of the registering authorities falling in respective jurisdiction of LTUs/RTOs.
The FBR said that in respect of withholding tax regime FBR is having huge reliance on the said referred three sections pertaining to real estate business. Collection figures up to the month of December, 2016 reveals that these sections are not manifesting the required growth. The increased rates of filer and non-filer and introduction of fair market value while calculating both these taxes has tremendously increased the scope of collection from these sections. The other important point is that the responsibility of the advance tax collection in these three sections lays with one withholding agent, ie, Registering/Transferring Authorities. However, it has been observed that despite these changes these sections (236K & 236C) are not recording the required growth. In order to fetch the required growth you are requested to conduct an in depth analysis in respect of these sections and send a report to this effect on the laid down format.
The FBR said that in respect of section 236W a detailed Circular No.18 of 2016 dated 07-12-2016 has been issued wherein the same withholding agents shall deduct/collect at the time of registration or attestation or transfer of immoveable property from the purchasers or transferee advance tax 3% of the differential amount between the FBRs prescribed value and value recorded by the registering authority. The formula for the calculation of this differential amount has been clearly explained with examples in the Circular No. 18 of 2016. However, it has been observed with grave concern that collection reported u/s 236W in the month of December, 2016 is pathetically low. The proper implementation of this section can only be ensured by conducting in depth audit of the registering authorities falling in respective jurisdiction of LTUs/RTOs.
Chief Commissioners of LTUs/RTOs are therefore requested to send a withholding agent wise report in respect of these three sections (236C,236K and 236W). The results provided will be tabulated and shall be presented to Finance Minister in the next meeting of Member (IR-Operations). Chief Commissioners of LTUs/RTOs are requested to observe the deadline so that the data can be tabulated well before in time, the FBR added.