Builders seek one-time immunity on source of funding

KARACHI: Real estate builders and developers have asked the government to grant one-time immunity on the source of funding to the entire sector as the authorities had previously provided to the stock investors.

“This would result in significant increase in the construction activities in the country, and masses would have the opportunity to access affordable housing,” the Association of Builders and Developers (ABAD) said in its proposals for the federal budget 2016-17.

The voluntary tax compliance scheme (tax amnesty) by the Federal Board of Revenue (FBR) for traders has not been a success; ABAD proposes that the modified version of the amnesty scheme should be announced for all taxpayers and non-taxpayers.

“The declared value of assets can be treated as income of the person availing the scheme, on which income tax at the rate of 1.0 percent can be levied to broaden the tax base,” ABAD said

ABAD has also proposed that the rate of sales tax be brought down to single digit “as the existing rate of 17 percent is even higher than the margin of profit in most cases.” The real estate builders have recommended a flat sales tax rate of 7.0 percent.

In order to discourage the interaction between tax collectors and tax payers, ABAD suggests that the income tax should be collected at the time of approval of the project on square feet basis, while “a charge of Rs15/sq ft should be levied, spread on the construction period of the project. It also proposed development tax at the rate of Rs10/sq ft on land.”

The association suggested that the new system and rates should continue for at least ten years, while tax should be levied throughout the country on all type of constructions.

It is suggested that NTN certificate may be made compulsory for the approval of any proposed building plan even in the case of a single residential unit.