The Federal Board of Revenue (FBR) has announced to treat the cooperative housing societies (CHS) as a company for tax purposes. FBR also mentioned that they will make sure that CHSs file their income tax returns properly on an accrual basis.
The FBR issued circular number 3,2022 instructing formations to resolve outstanding cases for revenue collection. It was mentioned that under the cooperative society act 1925 there are 3 problems
· Real Estate projects take much more time than any other project to complete so, it is difficult to keep track of revenue and expenses.
· Under the doctrine of mutuality CHSs have claimed tax exemption. Indicating that no one can make a profit or generate an income by doing business with itself.
· The differential handling of CHSs resulted in conflicting case laws, further complicated the case.
As a result, the exchequer got below par revenue while compliance costs increased for CHSs.