ISLAMABAD: Pakistan’s tax department has raised serious compliance concerns against Faisal Town Pvt. Ltd., framing a tax concealment case and issuing a demand of Rs 406.23 million along with default surcharge for Tax Year 2023.
Faisal Town is a major private housing project located in Sector F-18 near the M-1 Motorway, close to the Islamabad–Peshawar Motorway interchange.
The society has emerged as one of the prominent residential developments in the capital region due to its location providing direct access to Islamabad, Rawalpindi and the motorway network.
Over the years, it has attracted a large number of investors and overseas Pakistanis, positioning itself as a high value real estate venture in Islamabad’s expanding housing market.
The order was passed by the Deputy Commissioner Inland Revenue at the Large Taxpayer Office Islamabad (LTO) under Sections 161 and 205 of the Income Tax Ordinance, 2001. Section 161 deals with the personal liability of withholding agents who fail to collect, deduct, or deposit tax as required by law, while Section 205 governs the imposition of default surcharge on unpaid tax amounts.
Sources said that the housing society allegedly failed to properly discharge its obligations as a withholding agent while housing developers routinely deduct advance tax under Sections 236K and 236C on property transactions, there are recurring concerns regarding the timely submission of withholding statements to the Federal Board of Revenue, delayed deposit of collected taxes, and incomplete documentation of payments made to brokers and intermediaries.
Such alleged lapses, sources say, create transparency gaps in high value real estate transactions and potentially result in revenue losses.
However, Faisal Town has strongly contested the demand and has filed an appeal before the Commissioner Inland Revenue (Appeals), Islamabad. In its petition, the company has described the January 31, 2026 order as unlawful and without legal effect, arguing that the jurisdiction under Section 161 was exercised contrary to the scheme of the Ordinance and settled legal principles.
The housing society claims that the assessing officer failed to specify the relevant transactions, did not identify the names and addresses of the alleged payees or brokers, and did not clearly establish any instance of default. It has further alleged that proper reconciliation under Rule 44(4) was not conducted and that it was not provided a meaningful opportunity of hearing before finalization of the order. The developer has also challenged the levy of default surcharge under Section 205, terming it illegal and unjustified.
The company has requested the appellate forum to set aside the impugned order and delete the tax demand of Rs 406,233,613 along with the associated default surcharge.
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