Govt likely to renew REIT scheme benefits for another three years in budget 2024-25

ISLAMABAD: The Federal government is likely to extend REIT scheme benefits for another three years in budget 2024-25.

Sources informed Profit that the Federal Board of Revenue (FBR) will propose to renew the benefit available on the transfer of shares / property to a REIT scheme pursuant to Clause 99A of the Second Schedule of the Income Tax Ordinance (ITO) for another 3 years, i.e., till June 2026.

Sources added that this will lend support to efforts to document the real estate sector, where currently large sums of untaxed money is parked.

Under the clause 99A, profits and gains accruing to a person on the sale of immovable property or shares of Special Purpose Vehicle to any type of REIT scheme are going to expire up to the 30th day of June, 2023.

If clause 99A of the Second Schedule of ITO is not extended beyond 2023, people will be discouraged to transact with REITs, which will be detrimental to the efforts to document the real estate sector.

By extending the exemption under the said clause beyond 2023, off-the-books transactions will be minimized and lead to growth of the REIT sector, which in turn will boost the confidence of investors in a regulated real estate sector. Furthermore, it will promote agricultural and industrial warehousing, and the outsourcing of cellular towers.