Islamabad: The government is considering changing the tax regime for the real estate industry in the upcoming fiscal budget (2021-22), according to press reports. The revision would yield an additional PKR 8 billion in revenue for the national exchequer.
According to finance ministry officials, implementing the ‘normal tax regime’ on the non-transferable/immovable property (valued more than PKR 20 million) will produce an extra PKR 4 billion in yearly income. Moreover, the government may alter the tax system on property’s rental income, generating an additional PKR 4 billion in revenue.
However, as per the sources, the total tax collection of PKR 8 billion expected from these two measurements, is significantly less than what the government might earn by revising property valuations closer to their fair market rates.
It was reported that, presently, the Capital Gains Tax (CGT) rate for the highest income slab of above PKR 15 million is only 10%. In comparison, if someone earns between PKR 15 million and PKR 30 million per year, they are subjected to a 27.5% income tax. As per the source, the downward revision of property valuation tables is costing severely to the national treasury.
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