How has Prime Minister Imran’s income tax massively increased after a property sale?
The latest tax directory for parliamentarians published by the Federal Board of Revenue (FBR) has sparked controversy. Prime Minister Imran Khan paid a total of 9.85 million rupees in income tax for the 2019 tax year. His income tax jumped 3389% in his first year in office, rising from 282,449 rupees, paid in 2018.
Analysis of RBF tax returns from 2018 reveals PM was ranked 141st in the list of income taxes paid by deputies and senators for the 2018 tax year. Considering that it is ranked 9e in the same list of taxpayers for 2019.
This has left tax analysts and current affairs analysts perplexed. In a comment to the BBC’s Tanveer Malik, Information Minister Fawad Chaudry claimed that the Prime Minister’s massive income tax increase was the result of a sale of property. A closer look at Pakistani tax laws raises important questions.
Taxable income in Pakistan is calculated according to five different types of income as follows:
- Income from other sources, which includes income from dividends, royalties, etc.
This means that income tax is the total sum of taxes paid on wages, property, businesses, capital gains, and income from other sources.
The Pakistani Finance Law 2018-2019, which was applicable for the tax year until 2019, clearly states that no capital gains tax will be levied on property or land sold after being sold. detained for more than 3 years. To put it in context, for Imran Khan to pay capital gains tax, he must have sold a property that he purchased in the 2016 tax year or after.
This raises two relevant questions:
- A) What property / land did Imran Khan acquire between 2016 and 2019
B) which was subsequently sold in the 2019 tax year and C) resulted in a capital gains tax so high it resulted in a skyrocketing increase in the Prime Minister’s income tax return?
- If Fawad Chaudry’s statement about a property sold by Imran Khan is incorrect, what caused an increase in income tax returns for the Prime Minister? In other words, if the increase in income tax was not the result of capital gains tax, then what led to the increase?
Additionally, a high level RBF source corroborated the above analysis. The source added that the prime minister has not declared any such property or its sale. The source added that all properties held for more than 3 years were exempt from capital gains tax by the 2018-2019 finance law.
A report by the Pakistan Election Commission (ECP) on Prime Minister’s real estate and assets in 2020 showed that the total value of Prime Minister Imran Khan’s assets was Rs 80.6 million. According to the 2020 report, the Prime Minister only added to his portfolio of real estate assets (property + land) and did not present any land or property sales.
Pakistan Tehreek-e-Insaf (PTI) presents itself as a champion of accountability. Imran Khan presents himself as Pakistan’s most transparent leader. In light of this, it is important that the Prime Minister be clear about the reason for his high tax return in the first year of his term.