Economy

FBR launches tax Recovery drive against Cooperative housing societies

FBR launches tax Recovery drive against Cooperative housing societies

According to a circular published by the authorities, a taxation procedure was issued for transactions conducted by cooperative housing societies, and tax offices were required to secure recovery of past years against sales and purchases by the same.

The taxation of cooperative housing societies registered under the Cooperative Societies Act, 1925, has faced obstacles in the past, according to the report, primarily for three reasons.

One, real estate development projects take significantly longer to complete than other types of projects, making revenue and expense recognition more complex.

Two, most cooperative housing organisations have claimed tax exemption under the “Doctrine of Mutuality,” suggesting that no one can gain money or profit by doing business with oneself.

Three, the disparate treatment of cooperative housing societies across tax offices has resulted in contradictory case law.

A cooperative housing association is classified as a corporation for tax purposes under Section 80 (2) (e) of the Income Tax Ordinance, 2001 (ITO 2001). As a result, there is no doubt or disagreement that a cooperative housing organisation should be recognised as a company for purposes of ITO 2001 action