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Thursday March 28, 2024

Real estate sector proposes cut in withholding tax for return filers

By our correspondents
May 19, 2017

KARACHI: Real estate industry has urged the government to reduce withholding tax to one percent from the existing two percent on the purchase of immovable property by income tax return filer.

In case of sale of property, the withholding tax rate should also be reduced to 0.5 percent from the existing one percent, it suggested.

Pakistan Real Estate Investment Forum (PREIF) submitted its proposals for the upcoming budget 2017/18 to the National Assembly's standing committee on finance and said the existing rates for non-filers should be kept intact.

Shaban Elahi, president of PREIF, in a statement issued on Thursday, appealed the government for further facilitation of real estate sector by enabling business-friendly environment so that the local and foreign investment could further be increased.

Demanding friendly federal budget for the real estate sector, he also urged the provincial governments to reduce provincial taxes such as stamp duty, capital value tax (CVT), town tax and registrar fee in order to minimise transactions costs.

"It will not only benefit the consumers, but a large number of people will opt for documented transactions, instead of resorting to general power of attorney, which prompts disputes,” he added.

At present, the rate of provincial taxes on stamp duty is two percent, CVT is 2.5 to three percent, town tax one percent and tax on registrar fee is also one percent.

"Total rate of taxes in the province is around seven percent, which needs to be brought down,” he added.

The PREIF president also drew the attention of the federal government towards the anomalies detected during the property valuation in some areas of country, including SITE Industrial Area Karachi, Landhi Industrial Area, Port Qasim Authority, DHA City Karachi, Anmol Cooperative Society Lahore, some areas of Faisalabad, and DHA Valley Islamabad.

"Stakeholders were assured that the anomalies would be rectified, but so far no practical step has been taken in this regard,” Elahi said, and demanded the federal government and the Federal Board of Revenue (FBR) to remove these anomalies forthwith.

Quoting official figures, he said an amount of Rs76 billion worth of assets in real estate sector were documented in just five months.

For the first time, such a huge amount has been documented and became part of the country's mainstream economy due to the new section 236W of the Income Tax Ordinance, he added. The National Assembly highly appreciated the proposals submitted by the Pakistan Real Estate Investment Forum.