New law to bring real estate tax evaders into the net

Author: By Shahzad Paracha

ISLAMABAD: To bring the tax evading real estate sector firmly under the tax net the federal government has decided to introduce a new law that makes it binding for all housing societies, developers and builders associations to register their companies with the Security Exchange commission of Pakistan (SECP) for commercial operations.

Daily Times has learnt through reliable sources that the new draft legislation makes it mandatory for housing societies, builders and developing firms to have joint bank accounts.

The owner of the company will have to submit their details within 30 days, Moreover; real estate companies will have to submit their yearly tax returns to the Federal Board of Revenue (FBR).

Furthermore, the housing societies will operate only on the approval of the SECP.

Without the consent of the SECP, no advertisement for the housing societies will be offered. The housing societies will be restricted from the booking of plots and if somebody wanted to do it has to take permission from the regulator.

In addition, the law prohibits the housing societies to take money in the name of investment and if somebody intends to introduce a new society then it has to take a No Objection Certificate (NOC) from the SECP. It would be mandatory to deposit the allotee’s money into the escrow Account and every society would have a separate escrow account.

It is worth mentioning here that the government and the real estate sector had reached a conclusion to enhance the Deputy Commissioner (DC) rate and the FBR had issued the notification in this regard.

A few days back, the developers and builder associations had recorded their protest to bring in the sector nto the SECP. It has shown serious reservation and said that if the government will impose the company law then it will halt the construction work around the country.

On the other hand, the SECP had issued a clarification on Thursday and stated that it had not any idea but its focus is to ensure that the companies registered with the SECP having real estate as their principal line of business, operate under certain rules and regulations in order to gain the confidence of the public.