Tax on market value

kasheikh72 · June 15, 2021, 5:14pm

Today in a published interview the Governor of State Bank said in unambiguous terms that the government wants to choke off investment in the real estate sector and divert the investment to other sectors. He didn't identify these "other sectors" or what incentives are being provided for investment in those areas.

Most property investors have a net investment less than Rs 10 million in property. What new industry can be setup in this amount, unless, the govt has recently categorized kiryana stores as an industry! How can a small investor setup an industry when even the more established industrialists are converting from manufacturing to retailing.

Lastly, a lot of the investors are either employed professionals or overseas people. Are they expected to quit their jobs and start a business, and that too in This environment? This govt has surely gone crazy with its planning and by the time they get done, they would have wrecked every sector of the economy.

Propertyppk01 · June 15, 2021, 5:14pm

As I said before and today's developments prove that government will not take back the new taxes and market value evaluation. Govt is determined to bring black money into the net. People involved were getting emotional here on the forum.

Real estate price in Pakistan will see the biggest slump in the history. Price will come down to 2008-09 prices.

isloo001 · July 19, 2016, 9:51am

Yousaf, what are those developments. Plz give us details.

adbash · June 15, 2021, 5:14pm

Mr Yousaf, if the prices come down so accordingly the tax collection drop because it is %age of transaction value.

If sale / purchase is reduced to say 20%, then the tax collection target of FBR would go for a SIX.

Expatriates would refrain bringing their money here and capital from Pak would fly to other markets abroad.

Just my 2 cents..

shamas1235 · June 15, 2021, 5:14pm

I have a question for some of the people who lives in foolish paradise and thinking that prices will come down.

an example of current price of 5-marla home

current price in normal area of Rawalpindi is 6 -8 million

construction cost at the moment is around 1800sf which means one has to spend around 4 million to construct the house again minimum price of 5 marla plot is around 2 - 3 million now normal 5-marla cost itself is around 6 + million !!!!!!!! now as per some people on this form if 20% price drop who is going to sell the property at 4 million ?????????????????????????

may be there will be some effect on luxury or big properties but at normal or middle level I don't think prices will come down...so stay calm and enjoy....

azyleo · July 19, 2016, 1:48pm

Dear prices will definitely come down but it will effect much in posh areas and specially posh areas plots but it will take some time when we will se the real effect as long as the investor have hopes they will not sale on low prices but if Gov stick to their plan then they have no choice but to sale and then real decline in property will start.

saadzafar92_2 · June 15, 2021, 5:14pm

At last some positive vibes..Yousaf sb..Sir keep dreaming..

http://epaper.tribune.com.pk/DisplayDetails.aspx?ENI_ID=11201607190009&EN_ID=11201607190003&EMID=11201607190003

hamidkhankhi · June 15, 2021, 5:14pm

@Fahad bhai thank you for your explanation. I still have some questions:

If someone never obtained NTN and thus never filed tax return he is called a non-filer just like the one who registered but didn't file return right ? So, IF both are non-filers and therefore the govt. Apply extraordinarily high tax rate for both kind of non-filers, who are the blackmoney owners to suffer 2 years jail then ?
When govt. Already legalizing non-filers (unregistered person) by charging more than double taxes everywhere possible then black / untaxed money question becomes irrelevant, isn't it ?
When we make SALES DEED all taxes are charged right there at the registrar office at the time of deal, what else govt. Want on such deal ?
If Immovable property value upto Rs. 3 million and land area upto 250 sqyd is exempted from taxes. Then what tax does a 120 Sq.Yd house owner has to pay if it is exempted? Don't you think it should be properly advertised to calm down the small and genuine buyer who dreamed entire life to have a small house for living, who saved money through Bachat Committees, family supports and God knows what else and who can not prove source of such funds in documentary forms ? Should he be punished with 2 years imprisonment due to undeclared sources of money ?
If upto Rs. 400,000/- income is exempted. Shouldn't we all ask the govt't to immediately make refunds to low income people such as sweepers, beggars, masons, hawkers, labor class and many other hand-to-mouth people the money they have paid to the govt as indirect taxes on phone cards, food, grocery items and all basic means of living? When they are tax exempted why they are charged ? Who will ask the Govt ?

Govt's own explanation and acts are full of contradictions, the tax collection mafia threats innocent people merely to pay bribe otherwise they fix them under false allegations.

Its not the tax, its the corrupt mafia, fear of humiliation and insult plus injustice system that stops common man to take this route and pay taxes as proud Pakistani.

How to handle all this if you are an ordinary man?

@Fahad Bhai, I do know I am tax exempted due to most part of earnings from foreign remittances. But I still do not prefer to go for registration because of FBR's blackmailers who anyway harass and get bribe no matter what you do and how genuine you are.

Trust me, most Pakistanis DO want to pay taxes but its the FBR's corrupt officials that make them think otherwise and take other routes or leave the country at all.

Please note that online submission and no-man interaction things are just golden words to lure innocent people, the reality is bitter.

You can not file returns online by yourself, you need an accountant or tax consultant who eventually leads you to those blackmailers. Corruption is in our society and that needs to be addressed from govt's own shoes first.

Hamid

kamran.diyatech · July 19, 2016, 6:44pm

So far there is no significant impact on Prices. In Topcity,Gulberg and Bahria Enclave.

isloo001 · June 15, 2021, 5:14pm

I think nobody is trying to understand the impact of this move. If govt and dealers settle on regularizing the property market and launder 7 trillion black money thru amnesty scheme, then there would be no need for the tycoons to keep their money hidden in speculative property market. They will immediately abandon all paper schemes and take the money to stock market.

So folks, get ready for a very rough ride. I am not keeping my fingers crossed over property market crash, but asking you to fasten the seat belts please as we might face turbulence.

saadzafar92_2 · July 20, 2016, 12:46am

Isloo sir stock is not so easy to play with…it is not everyone’s cup of tea…

ja0114 · June 15, 2021, 5:14pm

Isloo nice analysis.

i'm very confuse with whats going on in Pakistan real estate.

perhaps real estate in PAK may have lost its luster because prices are being stagnant for quite some time for majority of area that i'm monitoring and not able to give the return as other investments. But its the safest investment.

where are these crooks going to find the legitimate buyers if they have the majority stake?

in rest of the world real estates prices goes up and down but not in PAK; prices remain stagenant with minor correction if not higher. Why is this the case and what makes it behave like this?

i'm trying to understand what are the components that make the real estate market in Pakistan? e.g. Black money, dealers, local buyers (cash and finance) and foreign investment.

zahidsaghir · June 15, 2021, 5:14pm

Please read...

Real estate taxation issue to be resolved ‘soon’: Haroon

Reported by: `CT Report July 19, 2016

ISLAMABAD: Adviser to the Prime Minister on Revenue Haroon Akhtar has said the matter to determine fair market evaluation of real estate would be resolved in consensus with the organisations doing business in this sector.

“We held meeting with the representatives of real estate from across the country and exchanged ideas and suggestions on the matter”, he said talking to a private news channel.

He said it was also suggested to constitute a committee which would conduct meetings to find way forward. “Our objective is not to disturb those in the real estate business, what we desire, is to ensure actual pricing of the property instead of DC value,” he said. “It does not mean that we shall run after every businessman but only those where we shall suspect that actual prices were hidden.”

He said this formula is in practice in the whole world and the federal government wanted to implement it in the country to raise revenue.

The federal government is the competent authority to fix tax on income of the property and it would be done by independent evaluators identified by the State Bank of Pakistan (SBP), he said.

Haroon said the government is cognizant that the property business involves hundreds of billion rupees and the government does not desire to discourage them. But, this is also not fair such a huge investment has no documentation and tax worth billions of rupees is evaded in this sector. They should also cooperate with the government and give the due share to the government in the form of tax, he added.

“We have received many suggestions during meeting with real estate bodies and we want to resolve the issue in consultation with stakeholders”, he said.

Haroon Akhtar said there was no truth in reports that the government is going to postpone the real estate tax law.

kasheikh72 · July 20, 2016, 1:31pm

According to various market players, some downward flexibility is being seen in prices of built up properties i.e. Houses, but no visible change in plot prices yet. This is understandable because buyers and sellers are largely in wait and see mode waiting to see the outcome of this new controversy. Plot owners have nothing to lose if they wait for another month or more. However people who are selling constructed houses have to bear maintenance and depreciation costs with time. So they would prefer to dispose of their holding now rather than wait for a decision, which can go either way, whenever it is made. Overall trading volumes are being seen much below normal level.

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