One can feel the difference inside the revenue office Barakahu, Islamabad, after the promulgation of the new law to tax buying and selling of real estate in Pakistan on the revised market value by the state. There is little activity.

"The business of buying and selling of property has significantly gone down since the enforcement of the new law. People have to pay more tax on new rates and if they sell the property early they have to add capital gains tax," says Shamim Ahmed, a revenue department official.

However, he says, there are some clients in a hurry in some districts purchasing and transferring because the notification of the law has still not reached there.

Islamabad, which used to cater to clients of property in thousands a week has gone down to only a few hundreds. "People are not even transferring five-marla houses or pieces of land after that law, hoping the government would realise the situation and do something to revise the policy."

The Income Tax (2nd Amendment) Ordinance 2016 to implement the valuation rate of property came from the current fiscal year 2016-2017 and has caused a lull in the real estate business.

The real estate agents’ associations and people across the country have opposed this law, demanding waivers and relaxations.

"Though the government has taken the right step to collect tax but in Pakistan we did not think about it in the past many decades and now we think that things can change overnight. This is not possible," Shamim addes.

He fears the situation will affect the real estate business and people property advisors would face big losses in the comings weeks and months. He also thinks that the government is setting ambitious targets through such polices. He believes, gradually, the black market would create new ways of tax evasion and running business.

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Following the new law, the real estate agents and associations have protested against this sudden increase in taxes. They say that intervention of the government has panicked the real estate market and the business has drastically declined.

The government also formed a committee to listen to the concerns of the stakeholders but the results of the meetings were not fruitful. The government estimates up to 50 billion rupees revenue generation this fiscal year through this law. While the overall real estate market in Pakistan, according to government estimates, is currently valued at over Rs7 trillion rupees and most of it is black money or speculation.

"There is almost no business for the last two months because people have panicked and there is no buying, selling or transfer of the properties in all big cities," says Arif Jeewa, senior vice president of Association of Builders and Developers. "We do not oppose tax and we believe that this policy would help in reducing prices of properties and the speculators would get discouraged. However, a gradual and phase-wise implementation of this law was better for results," he maintains.

He also says that in some districts market value of land has been made high and that has also affected business. "Clients are confused while paying taxes because nothing is clear and in-writing at the local level yet." He says when government does lot listen to the people; such laws are ultimately challenged in the courts."

Experts are of the opinion that if the situation remains the same people would start investing in other businesses. "This is a growing business in Pakistan and it should be taxed. This happens everywhere in the world that the booming businesses are taxed. Such taxes also help in controlling and reducing prices in this business which is mostly run on speculation, says Mehtab Haider, senior reporter on economic issues.

"This tax ultimately will help in bringing inflated prices of properties down and a needy client who wants to have his house or property will get some benefit, which is good," he adds.