KARACHI: The recently introduced measures for real estate sector in the tax amnesty scheme and included as part of next financial years budget is gearing to dissuade use of real estate for parking illegal and tax evaded money.
This move has been undertaken by the government to widen the already narrow tax-base, but many believe this won’t be able to achieve its desired outcome, reported Dawn.
The measures introduced in next year’s budget for 2018-19 will require overseas and Pakistani residents to be tax filers for acquiring properties worth more than Rs4 million.
Also, the authorities decreased the adjustable income tax to just one percent of the property declared at the time of its registration.
The government has recommended the abolishment of Federal Board of Revenue’s (FBR) DC rates for determining provincial taxes and advance income tax enactment.
This would help in properties getting registered at their true market value.
As per the tax amnesty scheme, the government can take-over a property within six months of its registration by paying 100 percent over the registered price from the start of next financial year.
This presumes no person would be registering their properties at less than 50 percent of its market value.
An analyst from KPMG Taseer Hadi and Co. regarding this scheme said this move would enable to document the economy and bring about a revolution in the real estate sector besides creating legal wealth in the country.
The analyst added, many individuals would want to avail this scheme but predicted the number of transactions to increase before the start of next financial year 2018-19 as many would be fearful of this change and would like to enter the real-estate segment before the new rules kick-in.
But the KPMG analyst said those wishing to remain non-filers won’t have a wide variety of choice as they would be restricted to acquiring properties which would be priced less than Rs4 million.
But the analyst said overvalued properties (priced more than their actual market values) could take a nosedive which had been propped up by illegal and tax evaded parked money.
And smaller, cheaper properties would see prices remaining stable but may register a meagre uptick in price as time passes.
This is the area which can be called a safe heaven for tax evaders to park illegal money. Billions of Rupees transactions being conducted all over Pakistan on daily basis and going unchecked. In past two years property prices increased 300 to 500 percent depending on the locality. The current prices of property in Karachi is no less than the property prices in UAE and USA and the most benefited peoples are the real estate builders and Real Estate agents who are earning million of rupees in terms of commission without paying a single penny in government exchequer’s. These peoples has to be brought into tax net. FBR should review its policy and bring not only the purchase but also the builders and agents into tax net. FBR should put a tight and permanent
cap on this area where black money is being laundered very easily.
True, it is surprisingly too late action of GOVT and FBR. Millions of Rupees these agents, brokers and builders earned from common people against creation of ordinary demand and it is interesting, all these maafia’s are now crying because they want to still more and more without a single penny to Govt and FBR. Hope, things are now in positive route and property prices will be settled according to demand and supply.
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