Opposition members namely Syed Naveed Qamar of Pakistan Peoples Party and Asad Umar of Pakistan Tehreek-e-Insaf have blocked a treasury move to lower recently-notified property valuation rates for tax collection purposes for only two cities, terming the proposal unconstitutional. The report has been prepared by PML-N member Mian Abdul Manan, elected from Faisalabad and Muhammad Ali Rashid, MQM’s Member NA from Karachi.
The National Assembly Standing Committee on Finance and Revenue could not adopt a report of its subcommittee that had recommended significantly reducing the property valuation rates for select areas of Karachi and Faisalabad.
The report had proposed to lower property valuation rates for Defence Housing Authority (DHA) Karachi, SITE Industrial Area Karachi, Port Qasim Authority Karachi, Sindh Graduate Multipurpose Memon Goth Industrial Estate and Faisalabad Real Estate.
In August last year, the Federal Board of Revenue (FBR) notified fresh property valuation rates for 21 major cities of the country for the collection of withholding and capital gains tax on property transactions. Finance Minister Ishaq Dar had claimed that fresh valuations were expected to generate an extra Rs100 billion.
These rates were higher than the prevailing Deputy Collector Rates but were still only 30% to 40% of the actual market rates.
The subcommittee proposed that the rates for some areas of Karachi and Faisalabad should be significantly cut down and specified the new rates for the FBR to implement for these cities.
However, Qamar said, “It is not the job of the finance committee to determine area-specific property valuation rates.” He agreed to the principle that the rates may gradually be increased but this should not be done by the standing committee.
PTI’s Asad Umar went a step further and said that specifying new property valuation rates by a parliamentary body was unconstitutional, as its role was restricted to only supervision. He said that it was the job of the executive to determine these rates.
“Accepting the subcommittee’s report would mean endorsing an attempt to whiten black money,” said Umar.
FBR Chairman Dr Mohammad Irshad said that it was wrong to assume the FBR determined the new property valuation rates on its own in August last year. They had been finalized in consultation with relevant stakeholders, said the FBR chairman. However, he admitted that there were anomalies in the notified rates but insisted that that they should be rectified through a proper mechanism.
Shahban Elahi, representative of Pakistan Real Estate Forum, said that the property transactions were taking place on the general point of attorney due to high valuation rates in Karachi. He said that this temporary arrangement may create legal issues in the future and the committee should be sympathetic towards the real estate sector.
PTI’s Asad Umar also opposed the move to give a tax amnesty scheme at rates which are lower than the prevailing standard income tax rates. The FBR was against any kind of tax amnesty scheme, said Rehmattullah Wazir, FBR’s Member Inland Revenue Policy.
However, a written brief the FBR submitted in the standing committee did not oppose the amnesty scheme but narrated an overall situation where various stakeholders were seeking tax amnesty scheme.
“The federal government in principle has not taken any decision as yet on launching of amnesty scheme for overseas Pakistanis on repatriation of their funds and assets held abroad,” stated the FBR.
Nonetheless, it said that the Senate Standing Committee on Finance in December last year proposed that a general tax amnesty scheme might be introduced on similar lines.