Are You Required To Declare Your Assets? [Property]

The Asset Declaration Scheme 2019 is long over, and FBR is on a mission of sending notices and confiscating the “Benami” properties.

There is confusion though amongst the folks who own a property or a vehicle if the said scheme applied on them or not.

Put it in a simple question.

Are you required to declare your assets?

In today’s post, I will make it clear who is required to declare and who doesn’t.

Keep reading.

Are You Required to Declare Assets?

Section 114 of Income Tax Ordinance 2001 talks about those required to file their return of income and 4 sections explain the requirement of filing a return if you own an asset.

Let’s have a look.

  1. Any person who owns an immovable property equal to 500 square yards (16 Marla) or more or a flat in a cantonment area or in Islamabad capital territory.
  2. Has an immovable property equal to 500 square yards (16 Marla) or more in the rating area (municipal/metropolitan area).
  3. Owns a flat with a covered area of 2000 square feet or more in a rating area (municipal/metropolitan area).
  4. Owns a 1000 CC car or more.

FBR issued a circular to highlight these 4 sections so people who fall in any of these may file their tax returns.

This circular clarified that Tax Amnesty Scheme 2019 didn’t apply to the folks, who have assets but they don’t file a return. Otherwise, the circular would have been of no use.

But it did emphasize on declaring the assets.

So guys get ready to file your tax return if you own a property or car above the stated limits.

Even if you don’t have a taxable income or any income at all.

No excuses.

Exemption

A question may come in your mind, is there any exemption under the rules?

The answer is yes.

No law ever existed without having an exception to it.

Section 115 of ITO (income tax ordinance) exempts 4 types of persons from filing a tax return exclusively for these 4 sections.

I repeat, only for these 4 sections mentioned above.

Here are the exemptions:

  • A widow
  • An orphan up to 25 years of age
  • A disabled person
  • A non-resident (only for immovable property)

Again, the said exemptions are only for the 4 sections. Otherwise, if you have a taxable income, you will file a return.

The exemption for non-residents is limited to the property only. Which means if you own a car above 1000 CC, you have to file a return.

I hope you got a clear picture if you are required to declare your assets or not.

Bear in mind, these requirements are for the property or car you already have under your name

As for a new transaction, FBR has designed a procedure which makes you go through their system before you make a purchase.

You may have questions running through your mind, and that’s normal. I had them too when I came across these requirements.

And I got the answers through FBR’s customer service.

FAQs

As per an FBR representative:

  • The declarant won’t have to pay anything just for declaring their assets.
  • FBR may or may not ask you for the money trail or source of income if you purchased asset within 5 years of the tax year 2020.
  • They will not ask you for the source of investment in case of older properties.
  • Failure to file a return may subject to a penalty of Rs 100,000.

You may have more questions, and you are welcome to ask in the comments.

But for the complex or more specific ones, I recommend you to consult a tax lawyer or contact FBR and get their help.

The legal wing of FBR can answer all of your questions.

The contact number is 051 111 772 772.

Conclusion

The assets declaration scheme 2019 was introduced to legalize the Benami assets with a nominal tax. However, there was a misunderstanding as to which are the assets that come under the Benami category and do the common people have to declare their assets.

Income tax ordinance 2001 clearly explains it and FBR clarified through a circular that when you will declare your assets if you don’t have a taxable income.

There are also exceptions where you will be exempt from declaring your assets even if you fall in the required limits.

What’s your opinion about the requirement of declaring your assets?