KARACHI: The Sindh Board of Revenue (BoR) has resumed registering sale deeds of immovable property after a two-month suspension which caused it a revenue loss of around Rs500 million.

A senior BoR official said on Monday the registration started from Oct 5 after the Federal Board of Revenue (FBR) clarified that the BoR can charge stamp duty and other taxes on sale deeds on the basis of values recorded in the valuation table designed under the Stamp Act.

The issue was resolved at a high-level meeting called by BoR’s senior revenue member. FBR’s inland revenue commissioner and other senior tax officials from the two sides also attended.

It was decided that the valuation table notified by the FBR will be applied to determine and collect advance income tax on sale and purchase of immovable property.

The BoR stopped registering sale deeds from July 31 after the FBR notified its valuation table for property units in Karachi, Hyderabad and Sukkur. It created confusion among the provincial taxmen over legality of their own valuation table.

The BoR is the controlling authority in administration of revenue collection, including land taxes, land revenue, preparation of land record and other related matters.

There was a marked difference in property values in the tables notified by the FBR and BoR. For instance, the value of an open residential plot in A-1 category is Rs35,000 per square yard in the FBR table compared to Rs17,820 in Sindh’s. The value of a plot in category 2 is Rs12,000 per square yard in the FBR table against Rs6,600 in the Sindh table.

Overall, the values of different plots in the FBR table are higher by 51pc to 152pc.

The FBR under sections 236(c) and 236(k) of the Income Tax Ordinance notifies that any person responsible for registering, attesting or transferring immoveable property will be liable to pay advance income tax, whose rate is different for those whose file their tax returns and those who don’t. Such tax will be collected by the sub-registrar of the province at the time of registering a sale deed.

Earlier, the Sindh government in a rejoinder to the federation stated that the federal government was charging advance income tax on sale and purchase of property under Section 236(c) of the Income Tax Ordinance. Simultaneously, it was also charging capital gain tax on sale deeds which led to dual taxation on the same transaction carried out by the same person, it added.

However, a leading estate agent of Defence and Clifton described it a win-win situation for both federal and provincial governments. “They have agreed to fill their coffers at the cost of poor citizens already burdened by multiple taxes.”

He believed the move would discourage property owners to register their sale deeds and instead they would carry out sale and purchase on the basis of power of attorney which would deprive the provincial government of its genuine revenue.

Published in Dawn October 12th, 2016