In order to meet the amplified financial demands the government may increase tax rates on real estate in line with multiple sectors in up-coming budget 2017 – 2018.
The Pakistan Real Estate Investment Forum pointed the anomalies in the property valuation in some areas of country including SITE industrial area Karachi, Landhi Industrial area, Port Qasim Authority, DHA City Karachi, Anmol Cooperative Society Lahore, some areas of Faisalabad, and DHA valley Islamabad.
“Stakeholders were assured that the anomalies would be rectified but so far no practical step has been taken in this direction”, Shaban Elahi, President PREIF, said after submitting its proposals for the upcoming budget 2017-2018 to National Assembly’s Standing Committee on Finance with the hope that the suggestion will be given high importance.
According to government’s official figures, Rs 76 billion worth of assets in Real Estate sector were documented in just five months. For the first time such huge amount has been documented and became part of country’s mainstream economy due to the new section 236W of the Income Tax Ordinance.
According to reliable sources, FBR has also proposed to increase the Capital Value Tax (CVT) on real-estate claiming that introduction of taxes on properties has proved fruitful in the outgoing financial year. However, the measure, though could be better for generating revenue, is being taken without ensuring that the overall impact of the higher tax will not affect the low-income people, who would be barred from purchasing land due to high cost.
Recently in its budget proposals, Pakistan Real Estate Investment Forum (PREIF) had demanded the National Assembly’s Standing Committee on Finance, a welcoming federal budget for real estate sector. The PREIF had urged the provincial governments to reduce taxes such as stamp duty, CVT, Town Tax and Registrar fee in order to minimize transactions costs. At present rate of provincial taxes on stamp duty is 2 per cent, CVT is 2.5 to 3 per cent, town tax 1 per cent and tax on Registrar Fee is also 1 per cent. “Total rate of taxes in the province is around 7 per cent which needs to be brought down.
According to insiders, FBR has also proposed to increase Advance Tax on non-filers. The government had introduced a scheme of differential taxation under which the non-filers of returns are subjected to a higher rate of withholding taxes on various economic transactions.Apart from other initiatives, the government will also continue collecting advance taxes from the corporate sector in the next financial year, sources said. They said Finance Minister Ishaq Dar has asked FBR to further increase the tax targets from various sectors.
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