KARACHI: Business leaders have favoured a targeted amnesty, which could benefit genuine property buyers and real estate developers rather than those parking their ill-gotten money in plots.
Arif Habib, Chairman, Arif Habib Group, said government was designing an amnesty scheme to address the concerns of the real estate sector, which was reflected in freezing investment and reduced number of property transactions.
“There should be purpose specific amnesty for real estate developers and first time property buyers,” Arif Habib said while speaking at the Jang Forum held on Monday.
“Government should set a threshold, and those buying properties for the first time primarily for self residential purpose of up to Rs5.0 million should be given exemptions,” he added.
Arif Habib said investment in plots was absolutely non-productive, and these plots were only the parking lots of black money, which resulted in unjustifiable surge in property prices.
“The taxation rules and revaluation of property rates is a step in the right direction, but there are some flaws in the mechanism due to insufficient research into the matter.”
He said all the real estate stakeholders should conduct proper research and furnish their recommendations accordingly, so that a flawless mechanism or amnesty could be formed.
He said that real estate investors were scared either because they had ill-gotten money or the wealth reconciliation was not available with them; the latter ones should be facilitated and given relief.
“The amnesty must be to the extent of tax only; and there should be no exemption from other laws such as source of investment,” Habib concluded.
Abdul Qadir Memon, a tax expert and former president of tax bar, said there was a huge difference in the collector rates and actual values of the properties. “Due to these flaws, most of the money was going into real estate sector leaving other productive sectors cash starved, hence the need of revaluation of properties was felt,” Memon said, adding that the revision of property values was not carried out in a rational manner.
Memon said government had realised the problem, as the real estate sector plunged into troubled waters, and an amnesty package was being prepared.
“Investors should be given an option to launder their money on payment of certain percentage as tax; and the tax payment to property registrars at the time of registration must be made final tax,”.
These measures would restore the business activity in the sector, and then the values should be revised gradually to the levels actually prevailing in the market.
Hanif Gohar, former Chairman, Association of Builders and Developers (ABAD) and Vice Chairman FPCCI, recommended that the new taxation laws and revaluation mechanism should be deferred for a year and a process should be started with genuine stakeholders onboard to come up with a consensus. Zubair Tufail, President, FPCCI, also advocated a purpose specific amnesty favouring middle and lower class so as to enable them to acquire homes.
