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December 24, 2018

Reforms in real estate sector need of the hour

Islamabad

 
December 24, 2018

Ever Since July 2016, the government of Pakistan has increased 100 per cent taxes and FBR & DC value on real estate sector. The heavy taxes on the sector are on its way to the verge of destruction. Millions of people affiliated with the business are starving now-a-days. The real estate business is facing worst crises. The prices are going down and business has suffered 50 to 60 per cent reduction. Many offices of real estate consultants have closed. Trillions of rupees are invested in the sector and every year billion of rupees paid in taxes to the government. The allied 72 industries are also suffering but the government is ignoring the problems and demands of real estate sector. Taxes imposed have exposed this sector to difficulties. Thousands of overseas Pakistanis are also badly affected by the recession in real estate business and have diverted their saving to other countries and foreign exchange reserves have been dropped. Overseas Pakistanis are also keen to know the government policy for real estate sector. An attractive investment policy will ensure many times increase in remittances by overseas Pakistanis. We are knocking the doors of FBR, National Assembly and Senate through finance committees to redress our grievances since July 2016.

Following are some Suggestions and recommendations for the revival of the real estate sector in Pakistan:

1. Real estate sector should be declared as dedicated field and must be designated federal minister and also designate provincial ministers.

2. The Government of Pakistan should immediately allow all Pakistanis to buy a property and they should be considered as filers.

3. 100% increase in the taxes announced in July 2016 is withdrawn and thereafter all kind of taxes be frozen for at least three years and FBR & DC Values can be revisited with the consultation of all stake-holders.

4. The interpretation of 236W needs to be addressed immediately.

Following needs to be implemented forthwith.

a. In certain areas 3% is being charged forcefully for the Real Estate transactions irrespective of availability of declared amount. This is irrational and needs to be clarified to all regional offices of tax department.

b. Upper limit on availing 236W may be removed in cases where the purchaser wants to declare the actual value of the property.

5. A general amnesty should be announced for expatriates and Pakistanis having assets abroad to improve reserves and circulation of money for those who have not availed previous amnesty due to uncertain circumstances. We are demanding amnesty scheme only for those people who have undeclared amount, we will not support those people who are having black money.

6. Gain tax period may be fixed at 2 years with slab/flat rate of 5%.

7. In case where the properties are sold on installments by the land developers, the tax should be charged for the actual deposited amount and not on the booking price.

8. The upper limit of Advance Income Tax should be enhanced from Rs4,000,000 (rupees forty lac only) to Rs6,000,000 (rupees sixty lac only).

9. Real Estate Policy to be introduced/declared by the government forthwith general public, consumers, land developers, property consultants etc to create congenial environment in the country for this vital sector/field.

10. Confidence Building Measures (CBM) to be initiated by the government for land developers/consumers/societies to kick start real estate activity in Pakistan.

11. An independent department should be created to regulate all the real estate consultants of Pakistan and government should make some mechanism to secure the 2 per cent service charges (commission) of real estate consultants.

12. Builders/developers must be encouraged with easy loans and other facilities to promote real estate sector to overcome shortage of housing units in the country.

13. 1n case above para 3 is not acceptable by the government, real estate business to be documented on fair market value with 1% tax to be charged by federal and provincial governments.

Writer is the member of ICCI and General Secretary of Real Estate Consultants Association (RECA) DHAI-Rawalpindi

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