Buyers, sellers to face penalties for non-banking property transactions

ISLAMABAD: Citizens buying and selling property now face a new issue in the form of penalties for transactions made outside the banking system. This follows recent increases in property taxes and valuations by the Federal Board of Revenue (FBR).

Real estate expert Ahsan Malik told Business Recorder that penalties are being enforced under the Income Tax Ordinance, 2001, on property transactions carried out without using banking channels.

He explained that under Section 75A of the ordinance, a five per cent penalty applies to property purchases made through non-banking transactions if the property’s fair market value exceeds five million rupees, or if other assets involved have a fair market value of more than one million rupees.

Malik pointed to a letter from the Punjab Board of Revenue, sent to various regional officials, reminding them of the need to enforce these penalties.

During a pre-PAC (Public Accounts Committee) meeting, chaired by a senior member of the Punjab Board of Revenue, it was noted that many sub-registrars and land officials had failed to collect these penalties, as required by law.

According to Business Recorder, authorities expressed their dissatisfaction over the lack of compliance and have now instructed all relevant officers, including sub-registrars and land record officials, to ensure penalties are imposed on non-banking property transactions.

If these penalties are not collected, the officials responsible for processing the transactions will be held accountable, Malik added.

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