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Sargodha: Massive Property Transaction Fraud Uncovered by RTO

Sargodha Tax Office Uncovers Major WHT Evasion in Property Transactions

The Federal Board of Revenue’s (FBR) Regional Tax Office (RTO) in Sargodha has unearthed a significant withholding tax (WHT) evasion scam in Punjab. The scam involved property registrars, revenue officers, and lawyers who failed to deposit billions collected as WHT on property transactions into the national exchequer.

A detailed electronic audit conducted by the RTO revealed that these officials retained WHT collected from immovable property transactions, rather than transferring it to FBR’s designated accounts. Additionally, the audit exposed the issuance of fake tax challans and the application of incorrect, lower WHT rates for non-filers, further compounding the evasion.

In response, the RTO has launched recovery and prosecution efforts against those implicated, under the enforcement provisions of the Income Tax Ordinance 2001. A significant recovery of over Rs388 million has already been made from the defaulters.

This case highlights a broader issue of revenue leakage in the real estate sector and underscores the need for vigilance in other cities. The FBR’s success in Sargodha sets a precedent for detecting similar evasion tactics, potentially helping the board surpass its revenue collection targets for 2023-24.

WHT on immovable properties represents a major source of direct tax revenue for the FBR. Following a substantial increase in WHT rates under sections 236C and 236K of the Income Tax Ordinance 2001, effective from July 1, 2023, there has been a notable growth in collection – around 340.5 percent higher in 2022-23 compared to the previous year.

This breakthrough in uncovering tax fraud in Punjab is a crucial step in strengthening the country’s tax collection system and ensuring compliance with tax laws.