Islamabad: According to press reports, the Federal Board of Revenue (FBR) authorized its field formations on Monday to regard Cooperative Housing Societies (CHS) as a company for tax purposes and to ensure that CHSs file their income tax returns correctly with audited accounts on an accrual basis.
The FBR issued circular number 3, 2022 in this regard, instructing formations to address CHS pending cases to recover money. On this subject, all previous circulars and directives have been revoked. The taxes of CHS registered under the Cooperative Societies Act 1925 had suffered three challenges, according to this circular.
• For starters, real estate projects take longer to finish than other types of projects, making revenue and spending tracking challenging.
• Second, CHSs have claimed tax exemption on the “Doctrine of Mutuality.” It stated that no one can earn or generate income by doing business with themselves.
• Third, the matter was further complicated by the fact that CHSs were treated differently during creation, resulting in inconsistent case laws.
As a result, the exchequer received lower-than-expected revenue, while CHS compliance costs skyrocketed.