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Immovable property: serious flaws in collection of CVT detected - Naveed Yaseen - 07-21-2008 04:45 AM
SOHAIL SARFRAZ
ISLAMABAD (July 21 2008): The Federal Board of Revenue (FBR) has detected serious flaws in collection of capital value tax (CVT) from immovable property, where acceptance of incomplete manual challans by banks has resulted in defective database of CVT transactions.
Sources told Business Recorder on Sunday that FBR is seriously examining proposals of Directorate General of Withholding Taxes for removing discrepancies in the CVT collection system at provincial level.
A new proposal is under study to implement procedure for issuance of computerised payment receipt (CPR) on buying and selling of property by banks to ensure proper documentation of CVT paid on immovable property. Presently, a manual system for depositing CVT is being implemented in the field formations. Scrutiny of some of the challans has revealed that vital particulars of transferor and transferee are not incorporated in the challans. The banks are accepting such challans as a result of which it is hardly possible to prepare a database of CVT transactions. The income tax offices would regularly check the challans and refer back the cases, having incomplete particulars, to the concerned persons, the FBR said.
Sources said that CVT is charged on transfer of immovable property. The present mechanism of CVT collection is manual and its challan is filled manually by the "buyers" and "sellers" with NTN or CNIC number, which is mandatory. Under the procedure, the "buyer" deposits CVT in National Bank of Pakistan (NBP) and submit the challan with necessary documents where they are verified and sent for micro filming etc.
Similarly, buyer prepares legal documents for transfer of land. The buyer fills the CVT-1 challan. The form contains the buyers and sellers name, address and NTN or CNIC number and the form also contains the particulars of the land/property details. The CVT amount is calculated and challan is prepared and subsequently the levy is deposited in NBP.
The bank signs and stamps the challan with bank transaction details (presently old challan format is being used for CVT deposit.) Transfer documents with paid challan are filed with Land Registrar. After verification process, the documents are sent for microfilming and then the property is transferred to the buyer. Monthly statement/report of CVT is prepared manually and sent to respective Regional Tax Office or Large Taxpayer Unit.
As the existing system has serious flaws, the procedure for payment of income tax should also be adopted for CVT payment.
The proposed procedure would be as follows:
Under the proposed system, the banks will receive CVT on the basis of Input Form. The NTN/CNIC of buyers and sellers will be checked from "NTN Master Index", verifying the authenticity of the transactions. The computerised payment receipt will be generated by the bank, to maintain a computerised database of immovable property.
The CPR will be handed over to the payee and the respective data will be transmitted electronically to FBR on agreed format. The validation checks will be applied by Pakistan Revenue Automation Limited (PRAL) on receipt of data. Electronic data will be stored in the database of FBR and data shall be simultaneously loaded on RTO's/LTU's Servers, the proposed procedure added.
http://www.brecorder.com/index.php?id=773895