The Federal Board of Revenue (FBR) is introducing stricter regulations to curb the use of undeclared income in real estate transactions. Under the new rules, individuals will be prohibited from purchasing property worth Rs. 10 million or more unless the funds are declared in their income tax returns.
FBR Chairman, while addressing the sub-committee of the National Assembly Standing Committee on Finance and Revenue, explained that the move targets high-value property transactions to ensure transparency and compliance with tax laws. He emphasized that the funds used for purchasing properties above Rs. 10 million must be declared in the buyer’s income tax filings.
The chairman highlighted that 97 percent of property transactions in Pakistan involve amounts below Rs. 10 million, meaning the new regulations will primarily impact the remaining high-value transactions. He further clarified that taxpayers with declared incomes of Rs. 130 million will be allowed to purchase one property. To acquire additional properties, they will need to increase their declared income.
Targeting Undeclared Wealth in Real Estate
The FBR chairman stated that the regulations are specifically aimed at non-filers and individuals with undeclared funds, as the real estate sector is currently a major destination for such income. He noted that during the fiscal year 2023-24, approximately 94 percent of property transactions were valued at less than Rs. 5 million, reflecting the dominance of smaller transactions in the market.
Additionally, the chairman revealed a startling statistic: only 12 individuals in the entire country have declared assets worth Rs. 10 billion or more. This underscores the need for stricter oversight of high-value transactions to prevent tax evasion and promote accountability.
The new regulations are part of the FBR’s broader efforts to crack down on tax evasion and bring more transparency to the real estate sector. By targeting undeclared income, the FBR aims to reduce the flow of unaccounted wealth into property investments and encourage compliance with tax laws.
