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The Punjab government has announced that it will impose a 5% penalty on immovable property transactions conducted without the use of banking channels. This decision is in accordance with the Income Tax Ordinance of 2001, which mandates the collection of penalties for property purchases made through non-banking means.
The Punjab Board of Revenue has written a letter to the Registrar of Cooperative Societies, the Director General of the Punjab Land Records Authority, District Registrars and Deputy Commissioners of all districts of the Punjab Province to enforce the penalty. The move aims to encourage transparency in property transactions and ensure compliance with taxation laws.
The penalty will be charged to any property purchase transaction that is not conducted through banking avenues, which forms part of measures to reduce unrecorded cash deals in the property market. The Board of Revenue’s directive shows that the government has plans to increase the scrutiny of property transactions under the provision of the Income Tax Ordinance 2001.
The letter states that a penalty of five percent will be imposed in the event of the purchase of property through a non-banking transaction if the fair market value of immovable property exceeds five million rupees or if any other assets have a fair market value exceeding one million rupees, as outlined in Section 75A of the Income Tax Ordinance, 2001 when read with entry no 21 of Chapter X.
The letter stated that the sub-registrars, assistant directors of Land Records, and transferring officers serving as withholding agents have failed to collect the penalty on non-banking transactions during a pre-PAC meeting convened under the chairmanship of a Senior Member of the Board of Revenue, Punjab, to evaluate the status of compliance with proposed draft paras.
The relevant authorities expressed their dissatisfaction regarding the failure to recover penalties on these transactions and instructed that guidelines be disseminated to all field units for the collection of the necessary penalties.
A recent communication from the Board of Revenue of Punjab has indicated that directives have been sent to all sub-registrars, assistant directors of Land Records, and transferring/attesting officers operating within their respective jurisdictions. These officials are now required to impose penalties for non-banking transactions in accordance with the specified legislation. The letter stated that if the penalty for non-banking transactions is not collected, the transferring attesting officer will be held accountable.
