Audit Reveals Widespread Non-Compliance in Pakistan’s Construction Tax Amnesty  
 
 
A recent audit by the Auditor General of Pakistan (AGP) has revealed that over 95% of builders and developers who registered under Pakistan’s 2020 construction tax amnesty failed to meet the scheme’s conditions.
The audit, titled Sectoral Audit of Taxation in Real Estate Sector, evaluated the impact of the construction package introduced in April 2020. The initiative aimed to stimulate economic growth by offering tax exemptions, reduced levies on building materials, and immunity from past liabilities.
According to the Federal Board of Revenue (FBR), 993 entities registered under Section 100D of the Income Tax Ordinance. However, auditors found widespread non-compliance, resulting in substantial revenue losses. Nearly 57% of developers assessed by RTO Islamabad were non-filers, exposing weak enforcement of tax return submissions.
The report criticized the initial centralization of cases from Punjab and Khyber Pakhtunkhwa under RTO Islamabad, which hindered monitoring and delayed assessments. Although 3,702 cases were later reassigned, frequent jurisdiction changes further disrupted progress.
Additionally, flaws in the Inland Revenue Information System (IRIS) allowed incomplete payment records and incorrect tax credit claims, enabling benami transactions. The AGP urged FBR to strengthen enforcement against proxy ownership to curb revenue leakage.