The Sub-Committee of the Standing Committee on Finance and Revenue has recommended delaying the consideration of the proposed Section 114C of the Tax Laws (Amendment) Bill 2024 until the Federal Board of Revenue (FBR) finalizes necessary technological upgrades to its online systems and applications. The decision was made during a meeting on Tuesday, chaired by MNA Bilal Azhar Kayani.

The proposed amendment aims to ensure that only tax filers with sufficient declared resources can purchase real estate, a measure designed to document and enhance tax compliance in the property sector. However, the sub-committee ruled that the FBR must first demonstrate the updated online system to the Standing Committee before the law can be implemented. Until then, the amendment will remain deferred.

Concerns were raised during the meeting about the potential for capital flight due to stricter regulations. However, officials expressed optimism that the new FBR app, once operational, would streamline property transactions and address compliance issues. The FBR has committed to providing a demonstration of the updated system, with one option being to reconsider the amendment as part of the budget process in June 2025.

The sub-committee emphasized the need for the FBR to focus on user-friendly technological changes, ensuring smooth facilitation for taxpayers and minimizing glitches. It also recommended replacing the word “Board” with “Federal Government” in clause (1)(b) of Section 114C, allowing the Federal Government to determine value thresholds for property transactions. This change is intended to protect lower and middle-income citizens, particularly first-time homebuyers or those purchasing primary residences, from being adversely affected by the new regulations.

As part of its review, the sub-committee introduced several key revisions to the bill, refining definitions related to property transactions:

• Eligible Person: A taxpayer who has filed a return for the previous tax year and has sufficient financial resources. The definition now includes individuals who can justify their sources of investment and expenditure through official statements, as well as their immediate family members.
• Immediate Family Members: The terms “son” and “daughter” have been replaced with “dependent children” for clearer legal interpretation.
• Sufficient Resources: The definition now explicitly includes assets such as local and foreign currency, gold, stocks, bonds, and other cash-equivalent assets. It also accounts for barter transactions involving declared capital assets exchanged for property.

The sub-committee chairman highlighted that 95 percent of real estate transactions involve properties worth less than Rs. 5 million, while 97 percent of deals last year were under Rs. 10 million. He stressed the importance of ensuring that first-time homebuyers are not overburdened with documentation requirements. The sub-committee also proposed allowing non-filers to purchase property under specific conditions to avoid excluding a significant portion of the population from the market.

The recommendations aim to strike a balance between improving tax compliance and ensuring that property transactions remain accessible to ordinary citizens.