I FAIL to understand why the Federal Bureau of Revenue has made property sales and purchase policy blind‑folded.
If you sell a house worth Rs40m but the FBR value of that house is two million rupees depending on the area, then your misery starts from the day you complete your transaction and get the money. Your sales amount equal to FBR value will be your white money that you can exhibit in your bank account and the rest will be your hard‑earned money, but you will not be able to justify the source of this excess amount and becomes your black money. Since you paid the stamp duty while transferring it at the FBR‑declared value, which was much lower than the actual one you cannot reveal over and above the FBR value of your property.
You unintentionally become a member of black money market without committing any crime and if the FBR gets hold of you, then you are in serious trouble.
In case of declaring actual transaction amount instead of the FBR‑declared value, you have to pay a CVT between three to 10 per cent of the total value depending on the numbers of years you held the property in your name. The sooner you sell after the purchase the higher the rate of CVT. Owing to this anomaly and unreasonable policy, property business is at stake and, on the other hand, sellers are forced to make black money.
My suggestion to the FBR is to eliminate CVT policy based on tenure and also revise the policy of stamp duty on the transfer of property. Make it a simple policy of absolute tax. For instance, on transfer of 250 sqyds or 10 marla house or plot , buyers have to pay Rs300,000 and sellers, as you go bigger, the amount increases by 10pc and no tax for houses smaller than 250sqyds. This will make things simple and transparent and will not force sellers to unintentionally committing a crime.
Hope the FBR will look into the problem.