Real estate transactions: FBR may allocate electronic TRNs to buyers and sellers

[LahoreEstate]

SOHAIL SARFRAZ
ISLAMABAD (May 19 2009): The Federal Bureau of Revenue (FBR) may include electronic allocation of Trial Registration Numbers (TRNs) to buyers and sellers of property with the objective of evaluating the number of real estate transactions for tax purposes. Sources told Business Recorder on Monday that the Federal Board of Revenue (FBR) is examining a proposal to issue temporary registration numbers to buyers and sellers of property under an enforcement plan to broaden the tax-base.

The proposal might be enforced from the 2009-10 fiscal year to bring buyers and sellers of property within the documented sector. The FBR developed online linkages with the housing societies and development authorities for obtaining data of buyers and sellers of property. There is a possibility to automatically allocate TRNs to the buyers and sellers on completion of property transactions.

The number would be allocated electronically and, subsequently, would be transferred to the relevant tax officials with appropriate jurisdiction. According to the sources, if the TRN is being issued to the person, the department can ask the potential buyers and sellers to file their income tax returns.

If the buyer/seller of property has declared no income, the department can confront the taxpayer to explain source of investment in real estate sector. Later, the department may issue permanent National Tax Number (NTN) to the potential taxpayers.

Presently, every registration/development authority has to file statement of transfer of property electronically. For example, the Capital Development Authority (CDA) has to file monthly statement on property transfers to the tax department. The e-filing of statement includes particulars of buyers and sellers of property.

In case the FBR introduces the concept of TRNs for purchasers/sellers of property, the electronically filed statement would provide necessary information to bring them into the tax net. Secondly, the amended capital value tax (CVT) form would also provide data of buyers and sellers of property. The banks would issue computerised payment receipt (CPR) on payment of CVT on property.

The FBR also devised the necessary computer software for obtaining electronic information of buyers and sellers under the proposed arrangement. When anybody would make payment of CVT in banks, the CPR would also provide data to the tax department for broadening the tax-base.

Thirdly, the department has also obtained computerised data from some housing societies on buying and selling of property. This information could also be used for broadening the tax-base. It is worth mentioning that the FBR proposed amendment in the Income Tax Rules to allocate TRNs for compulsorily registration of new taxpayers.

The concept of the temporary registration numbers would be implemented through amendment in the Income Tax Rules. The TR numbers would be issued to those persons, who would fail to respond to the notices of the income tax department for registration purposes.

According to the proposed amendment, the commissioner with jurisdiction over a case may register a person as a taxpayer when he is satisfied that the income of the person is taxable and is required to file a return of income under section 114 of the Income Tax Ordinance 2001.

The commissioner will issue a letter to the taxpayer under subsection (2) of section 181 to submit an application for registration, prescribed under rule 80, along with documents specified therein within a reasonable time given in the said letter.

In case of compliance, the NTN certificate will be issued accordingly. In case of failure of the taxpayer to comply with the letter issued under sub-section (2) of section 181, the commissioner will register the taxpayer on a TR Number for which the commissioner will maintain a serially numbered Trial Register.

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