Karachi: The government has announced that no fixed tax regime will be introduced for builders and developers in the current fiscal year, proposals for a fixed tax regime are likely to be reviewed in the next fiscal year.
An official at the Federal Board of Revenue (FBR) Inland Revenue (IR) Large Taxpayers Unit (LTU-II) Karachi confirmed that no such proposal is under consideration and government is firm on no exemptions from disclosing investment sources in real estate dealings. Previously, a proposal in this regard was floated in October 2019, to offer relief to developers and builders.
The LTU-II Karachi has jurisdiction over all developers and business operating in Balochistan or Sindh. The official reiterated that the tax rates for builders and developers would be charged as per the prevailing law. Presently, the developers and builders are liable to pay income tax returns for completion of projects/plans in phases.
However, the prevailing tax regime has complexities that are creating conflict between authorities and taxpayers. As per the sources, taxpayers (brought recently under the documented economy) are required to declare their income sources and provide their client’s transaction details.
LTU-II Karachi has been working on monitoring transactions and conducted detailed audits of builders and developers within its jurisdiction, under FBR’s instructions.