Federal Board of Revenue eyes jackpot in Islamabad property audit
In an exercise to determine the amount of money pouring into real estate investments in the federal capital, the Federal Board of Revenue has struck upon a surprisingly high number. Using data from the Capital Development Authority, the tax authorities have learned that 6,348 rich people from across the country invested over Rs106 billion from 2014 to 2017, as per DC rates. The real value at which these purchases have been made would be far higher.
The purchases were in 3,530 residential and 2,818 commercial properties.
After Islamabad and Rawalpindi, Peshawar topped the list of cities sending money into real estate investments to the federal capital, followed by Karachi and Lahore.
Details of the investors, and their transactions, were sent to 15 regional tax offices around the country a few weeks ago, with instructions to issue notices and ask for source of income and taxes paid by each.
Almost half of these people did not even exist on the tax roll — meaning they have no national tax number. “We are expecting to raise maximum revenue from these transactions,” a tax official familiar with the exercise told Dawn.
The data available with Dawn shows that the residents of Islamabad topped the list in real estate transactions. As many as 3,617 people, almost half of the total, have done transactions worth Rs56.8bn in residential and commercial properties. The second highest transactions in real estate came from 935 residents of Rawalpindi, at Rs12.4bn.
From Peshawar, 667 residents invested Rs10.7bn in 417 residential and 250 commercial properties.
A Peshawar-based industrialist told Dawn that businessmen are moving their investments out of the city because of high cost of doing business in Khyber Pakhtunkhwa. He said businessmen are also losing the Afghan market following Afghan importers’ reluctance to buy goods from Peshawar.
He said investment in real estate in Islamabad is now the only option available to Peshawar-based businessmen to get some returns on their money.
Fourth on the list is Karachi whose residents made transactions of Rs9.3bn in 288 residential and 136 commercial properties. These cases have been sent to their respective RTOs of Karachi for further action — 212 cases to RTO III; 83 cases to Corporate RTO; 87 cases to RTO II; and 42 cases to the Large Taxpayer Unit (LTU).
In Lahore, 329 people made transactions in 244 residential and 85 commercial properties worth Rs5.7bn. Of these, 203 were registered in RTO II, while 136 in CRTO.
An FBR official said that the smaller volume of transactions from Lahore in the federal capital could be because the Punjab capital offers a growing and lucrative market of its own for investors in real estate. He said the potential from a similar exercise in Lahore is much higher in terms of transactions in real estate compared to residents of other cities, as well as likelihood of locating vast pools of untaxed wealth.
Further analysis shows that 108 residents registered with the RTO Abbottabad made transactions of Rs3.5bn in 63 residential and 20 commercial properties, 103 people invested Rs5.7bn in 41 residential and 62 commercial properties in Quetta; 57 people in 35 residential and 22 commercial properties worth Rs1.3bn in Faisalabad; 55 people in 28 residential and 27 commercial properties worth Rs673.8m in Sialkot; and Rs334.3m were invested in 21 residential and 22 commercial properties in Sargodha.
By Mubarak Zeb Khan