The recent tax chaos and its proposed implications created confusion among many people who have a direct or indirect stake in the real estate sector. Though some of the amendments made to the Income Tax Ordinance were rolled back after several rounds of negotiation between the officials concerned and representatives of the property sector, investors and other stakeholders are still awaiting a final decision in this regard. Needless to say, there are some positive developments, and one of them is the proposed tax amnesty scheme, which aims at bringing PKR 7 trillion untaxed money (currently stocked in the property sector) into the tax net.
The contours of this amnesty scheme were discussed between Finance Minister Ishaq Dar and real estate representatives in a meeting held on Friday and according to a news report, the scheme will be implemented either through a presidential ordinance or by introducing a bill in parliament. The ins and outs of the scheme will be determined once the representatives of the real estate sector share property rates of 18 main cities with the Federal Board of Revenue (FBR) officials.
Please note that the FBR hasn’t left the matter unattended, as it will also conduct a similar survey in the same 18 cities and compare their findings with those shared by realty sector’s representatives. A ‘consensus rate’ will then be decided among the two parties, and this rate will be used as a basis for giving amnesty on property transactions held in the past and determining tax percentage for future transactions.
This simply means that the government has allowed real estate stakeholders to play their part in determining the fair market value of real estate.
It has also been cleared up that the government will not investigate the source of money invested in real estate sector in the past. Will this money remain untaxed and face no penalty? That, my friends, might not happen!
Per a news report, the amnesty scheme may include certain conditions such as charging old property transactions with a fixed tax of 4% to 5% on the difference between the Deputy Commissioner (DC) rate and the new rate decided between the FBR officials and real estate representatives as the fair market value of property. The final decision, in this regard, will be taken in this week.
Let’s see how the future unfolds for the proposed amnesty scheme, which seems promising for the property sector. Share you views with me in the comments section below.