Pakistan’s Real Estate sector has asked the government to transfer the decision of determination of Property Valuation from federal to provincial governments.
Pakistan’s Real Estate sector in its budget proposals for the next fiscal year asked the federal finance minister to exclude Section 68(4) of Income Tax Ordinance 2001 immediately besides Property Valuation should only be done by Provincial Govt who are already practicing it and capable of doing it as they already have Field Force Revenue Department.
Similarly, the provincial government is charging Stamp Duty according to their DC Rates and It is suggested that the Federal government should also charge Gain Tax/Advance Tax according to their DC Rates. Meanwhile, Property Valuation should only be done every year and once in a financial year.
The real estate also in its recommendations stated that presently Filer is paying 1% and Non-Filer is paying 2% advance income tax on the purchase of the property.
It is suggested that this tax should be reduced to 25%(Point Two Five Percent) for ‘Filer’ and for non-filer it should remain 2% because the advance tax can claim in a tax return by ‘Filer’, it will be helpful to increase the economic activity in the country.
Capital Gain Tax-(236-C) For Immovable Property
Presently Sellers (Filer) are paying 1% gain tax at the time of transferring the property and 2% by the ‘Non-Filers’ it is suggested that for ‘Filer’ it should be reduced to .25% (point Two Five Percent) and for non-filer, it should remain 2% (Two Percent).
Capital Gain Tax- For Immovable Property
The maximum period for determining gain tax may be fixed at 3 years instead of 4 years, with a 5% (Five Percent) flat rate. Reduction in the maximum period for determining Gain tax to 3 years with 5% (Five Percent) will enhance the Sale/Purchase activity and boost the economy.
Real Estate Regulatory Authority RERA
The government has passed Real Estate Regulatory Authority (RERA) bill 2020 from National Assembly and Senate for Capital Territory (ICT) only, but still not implemented.
If it is implemented then at least 70 to 80% of issues in the Real Estate Sector will be settled. There is a dire need for the formulation of RIM and its proper implementation just on the lines of other developed countries. Such a step by the government will facilitate removing different hurdles in Real Estate Sector.
Special Relief Package For Real Estate Sector
It is suggested that strong measures/announcements from Prime Minister should be made to further boost the prevailing Real Estate Sector. In this regard, Membership fee, Transfer fee, and Possession/Site Plan charges must be reduced at least 50% (Fifty Percent) by Transferring/Registration Authorities/Societies like CDA/LDA/KDA/ Bahria Town/DHAs,
Service Charges (Commission) of Realtors
The government should legalize the Two Percent (2%) service charges (Commission) on the Sale/purchase transactions from each side and One (1) Month Rent on Lease/Rental deals from each side by ordering all registration/Mutation/Transferring Authorities and Societies.
It is strongly emphasized that keeping into account these considerations while finalizing the Federal Budget 2022-23 for Real Estate Sector.
Real estate sector is based on black money and every one knows about this vital truth. More and more taxes should be imposed on real estate to tap this black money out.
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As Pakistan’s economy continues to grow, the demand for real estate is expected to increase as well. This will have a positive impact on the market and will lead to an increase in real estate values.