The Association of Builders and Developers (ABAD) has been struggling constantly to revive the real estate sector of Pakistan that snoozed as soon as the new tax mechanism came into effect. It was not just press releases and media campaigns which the association used as a tool to share their grievances and findings with the authorities concerned, the representatives of ABAD also held regular sessions with members of the Finance Committee as well as the higher Federal Board of Revenue (FBR) officials.
We also received their feedback on the announcement of the tax amnesty scheme and appreciate their untiring efforts to stand up for the whole industry and dozens of other industries linked directly with the real estate sector. I must also say that the proposals presented by ABAD in the past and their valuable take on how to implement the new tax regime without causing irreversible damage to the property sector has never been taken less seriously.
The representatives of ABAD along with its chairman, Mohsin Sheikhani, recently had a meeting with National Assembly Standing Committee’s sub-committee, which was chaired by Member National Assembly Saeed Ahmed Khan. The Defence and Clifton Association of Real Estate Agents (DEFCLAREA) president was also present in the meeting and he brought it to the committee’s attention that the property market in Sindh alone has faced a PKR 500 million loss since July 2016.
In this meeting, Sheikhani stressed that the complications that rose after the amendments were introduced in the Income Tax Ordinance 2001 should be removed in a manner that leaves everyone a winner. He also warned that if the matter isn’t handled properly, current tax policy will leave drastic effects on the economy of Pakistan. Not just this, he specifically mentioned that the tax matter can potentially become an issue for the ruling party in the next general elections.
Other than these warnings and the resulting repercussions in case the departments concerned ignore them, ABAD also shared some valuable suggestions to bring property investors into the tax net. Their first suggestion is the same as what they have been suggesting for a while now: defer the new tax regime till the next budget and involve the Ministry of Planning to formulate an extensive policy that helps achieve the objectives in the long term. ABAD emphasised that deferring the new policy will help the government, FBR members, and real estate stakeholders formulate an effective policy unanimously.
Sheikhani also proposed that all transactions carried out from July 01, 2017 onwards should be registered at the fair market value of property. He suggested that if the government would charge federal property taxes at 3% to 6% of FBR rates or 1% of the fair market value of property (whichever is higher), this will result in substantial increase in the tax revenue collected by the government.
Similarly, for provincial taxes, Sheikhani said that Stamp Duty, CVT, registration charges and Town Tax must not exceed 1% of the sale deed. At the moment, the provincial taxes (including registration fee and town tax) amount to 7.5% of the sale deed value or the DC Rate of property. He said the provincial government should charge either 7.5% of the DC rate or 1% of the Fair Market Value of property (whichever is higher). Sheikhani mentioned that the same practice is being used for property investments made through Real Estate Investment Trust (REIT).
To differentiate between tax filers and non-filers and penalize the latter, Sheikhani proposed that 1% additional tax may be charged on tax payers on the amount they don’t reconcile in their wealth statement. On the other hand, the tax filers who are willing to declare their cash assets may be given a one-time amnesty by charging 1% tax in the first two months, 2% in the second two months and 3% in the next two months. Sheikhani said that this amnesty scheme should only be valid for real estate investors and stakeholders possessing National Tax Numbers.
ABAD also proposed that the sources of income of those interested in purchasing flats, houses, or shops in projects that are in the development phase shouldn’t be probed for 5 years. Every Pakistani should be allowed to buy one house or apartment without being required to reconcile the amount in their wealth statement.
What is your take on the matter? Please let me know in the comments below.
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A sensible proposal which is balanced. All things must be considered when formulating a policy, the most important being keeping the economy of Pakistan stable.
Being an investor, I fully agreed with these proposals.
A balanced and sensible proposal. The main thing is that the Pakistani economy should not be adversely affected as this of course will be terrible for everyone. Let’s hope the Government can run professionally and pay heed. Even in their last tenure the Nawaz Government froze foreign currency accounts which was a disaster to the economy. Once again, they are making blunders by these sudden shocks to the system. Hopefully they can let the proper professionals run the system smoothly.
Agree to Irfan comments.
Our politicians are responsible for their ignorance to foresightness which was required decades ago and they are responsible damage to this sector by bringing the reforms overnight unpon waking up from a deep sleep, though active for personal benifets overseas.
Every humen including realtor/investor has right to strive for betterment and eveyone does as such.
Many countryman strive hard and acquired dream hoys in better area.
Individulal like myself, instead blaming othwrs,should see the available budget and choose the area accordingly.
Perhaps this is the best way to be happy.
Only in Pakistan where “culprits” & “looters” can threat and propose the laws. While public office holders bow-down instead of protecting and fighting for 20 Crore ordinary citizens.
Real Estate prices in Pakistan are already higher then even developed countries. Yet these greedy people are not satisfied and trying to start another ponzi-scheme to make quick buck. They should be last people Govt. should listen to while deciding about next tax regime.
May Allah send them all to hell where they belong.
MUSHI BHAAI ABSOLUTELY SHARE YOUR VIEWS….AB BROKER MAFIA IS DICTATING THE GOVT WHAT TO DO AND HOW TO FURTHER INCREASE PRICES OF HOMES
as rates of different lacalties of city have v been fi xed so there is no need to further pro be
“Every Pakistani should be allowed to buy one house or apartment without being required to reconcile the amount in their wealth statement.”
It means that this type of transaction will be totally black money. Govt should not allowed this type of corruption.
People on this forum should know that real estate in Pakistan is still cheapest in South Asia. India, Bangladesh have more expensive real estate in their main cities.
So you want Pakistan to stay a 3rd world country like them with most of the people living under extreme poverty in KHOALEEZ?
Sorry to say but don’t lecture or compare us with India & Bangladesh. We don’t want Pakistan to become cast based society like them. We are already better than them.
So, let’s talk about becoming a responsibly developed civilized country which is not a big task to achieve, considering Pakistan has enormous untapped potentials in many other sectors of economy.
Foriegn remittaces fall upto 40% during last 4 months .Due to property taxes ,
Govt should not listen to such proposals.
Property prices should be affordable to common men. All black money holders should be under tax net.
They are not interested to resolve Reasl esate problems in Pakistan as Their on Property business in UK and Dubai so what happened in Pakistan they do not care.
Mr. also has no interest his children are in Dubai living on looted wealth from Pakistan.
God Help Pakistan and save our future from these corrupt politicians.
I was looking for an 8 marla plot in Bahria Orchard. People first quoted ‘off ground’ plots at high prices and said that they are ‘on ground’. Then they quoted 50 lacs. Actual owners were selling at only 45 lacs. 5 lacs was the profit of dealers who get together to make mince meat of the buyers.
ye sara fasad ghar walay karte hain na tareef kar ke. jo ghar nahi milta banda gali gali dhondta phirta hai.
A Democratic GOVT must always make the policies in consultation with the concerned Sector, whereas present Govt not only make forced policy but also implement many policies without being made public.
It is preparing a ditch for themselves. Why don’t they apply tax on to the elite class and why don’t they pay their own tax.
Jiss Qaum ny 70 saal tak apni khameon aur kamzorion ko mark nahin kia aur bajay sudharny k udarrti jaa rahi hy us qaum pr aisy zawal ana us quam ka haq hy. Aaj government ko property ki prices ki fiqr kha rahi hai “Hairat Hay”. Lahore mein 2004 mein 5 marla ka plot 4 Lakh sy 4.5 Lakh ka tha aur 15 Lakh mein 5 marla ka double story ghar ban jata tha. Aur 2007-08 mein property ki prices iss wasty increase hona shuru ho gain keh business sector ko bijli aur gas ki supply kam kar k CNG sector ki loot maar start ho gai. Industry close hona shuru hui to wo raqam real estate investment mein aany sy demand aur supply ka bhianak khel start ho gaya. Aur 5 saal mein 5 marla ki price 4 Lak sy 50 Lakh tak rise ho gai. Ab jis jis ney iss ganga mein ashnaan kar lia woh pawitter hota gaya.
Ab wohi pawitarta government k galy mein haddi ban kar phans chuki hay. Na government ny industrial sector to revive karny ki policy banai, aur na wo paisa wapis industry mein gaya.
Moreover, Government did not timely frame policies to curb the sky-rising prices and investments. Now in present fiscal year, what happened to Mr. Daar who is neither ready to rethink or revise the framed rules?????????
Aaj PTI apny stand sy wapis ho jaey to government will review the matter.
A good initiative by ABAD and fellow Real Estate members. Hope we can voice out in a way to get success and it’s only possible by getting attention. We should take a media help in this.
ABAD proposal is most sensible and rational and a win win situation for every body. We should not involve politics in this and let the SCP and ECP sort out the other issues.
1-Democracy means equal distribution of natural Resources Gas Oil Gold Metals, Marbals etc; to General Public
2- Every Pakistani Pays 150% of each buying to the Government. each 1000 price paid on a commodity in Pakistan is 400 Rupees Actual Price so all taxes on that become 150% ( Rs 600), so consumer price becomes then to Rs 1000. That is Indirect Taxes on Each Pakistani including people below Poverty Line. Govt. send each of them Gas Royalty, Oil Royalty in terms of 40 % additional Tax than the international Buying Price, instead it is coming from teir own land.
3- Electricity Prices not Changed: Oil prices have lowered to 1/3 rd i-e-Dollars 110 per barrel to Dollars 40 per Barrel, if Pakistan do not produce a single litre of Oil. Electricity Prices depend upon Oil Prices as 60 % of Electricity is Thermal/ Oil and gas based. NEPRA departments are given to private Contractors Mr. Zaigham, Mr Nadir Khosa, Mr Insaf and one other contractor illegally, who sell desired public interest to the Power Companies for Personal Gains of NEPRA Authorities Cabinet Division has confirred such Powers to NEPRA Chaairman to privatise/ run through private Contractors the NEPRA is a Question arrising from Previous Zardari Govt. Continuing in this Govt through their common cum joint Interests. These Facts could not brought the Electricity Prices Down a single Rupee in basic unit rates.
4- What other is needed to Poor NS/ AZ Mixed Group from People of Pakistan in addition to PROPERTY TAXCum RENTal income etc;
Heart Patient NS was so ill that One Full Aero-plane brought back him from England transport expenditures of 24 Crores on Poor Pakistanis
Being an investor, Nice proposals. Lets see…
@Mushi. Which world are you living in? India has growth of 9% per annum and Bangladesh’s exports of textile, for which raw material comes from Pakistan, is more than us. So stop being emotional and be rational. Destroying Pakistani economy by destroying real estate is not the answer. Already all industrial sectors are destroyed and the only thing that is left is real estate and that also the present government is destroying. Pakistan has plenty of potential, whose denying that, but the present Government’s corruption and looting and incompetent policies won’t get us to the path of progress and development.
We can achieve 9% growth any-day while being socially responsible and preserving dream of owning a home for all Pakistanis. Also while preventing looters to park their black money in property market.
We don’t have to be like India or Bangladesh when we can become United States of Asia any-day. Just aim high my friend!