![\"abad\"](\"http:\/\/www.zameen.com\/blog\/wp-content\/uploads\/2016\/11\/abad.png\")
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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.<\/p>\n
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.<\/p>\n
The representatives of ABAD along with its chairman, Mohsin Sheikhani, recently had a meeting with National Assembly Standing Committee\u2019s 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\u2019s attention that the property market in Sindh alone has faced a PKR 500 million loss since July 2016.<\/p>\n
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\u2019t 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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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).<\/p>\n
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\u2019t 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.<\/p>\n
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\u2019t 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.<\/p>\n
What is your take on the matter? Please let me know in the comments below.<\/p>\n","protected":false},"excerpt":{"rendered":"
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\u2019s sub-committee, which was chaired by Member National Assembly Saeed Ahmed Khan. The Defence and Clifton Association of Real Estate Agents (DEFCLAREA) president was…<\/p>\n","protected":false},"author":18,"featured_media":23632,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[15015],"tags":[3565],"persona":[],"class_list":["post-23631","post","type-post","status-publish","format-standard","has-post-thumbnail","category-legal-taxation","tag-details-on-property-tax-proposal-given-by-abad","cat-15015-id"],"acf":[],"yoast_head":"\n