Pakistan’s real estate industry has requested that the government transfer property valuation decisions from the federal to provincial governments.
In its budget proposals for the coming fiscal year, Pakistan’s real estate sector requested that Section 68(4) of the Income Tax Ordinance 2001 be removed immediately, and that Property Valuation be done only by provincial governments who are already practising it and capable of doing so because they already have a Field Force Revenue Department.
Similarly, provincial governments collect Stamp Duty based on their DC Rates, and it is proposed that the federal government impose Gain Tax/Advance Tax based on their DC Rates as well. Meanwhile, property valuation should be performed just once a year and once a fiscal year.
The real estate also indicated in its suggestions that Filers currently pay 1% advance income tax and Non-Filers pay 2% advance income tax on the purchase of the property.
Because the advance tax can be claimed in a tax return by ‘Filer,’ it is suggested that this tax be reduced to 25% (Point Two Five Percent) for ‘Filers’ and 2 percent for non-filers. This will help to increase economic activity in the country.
Immovable Property Capital Gains Tax (Section 236-C)
Sellers (Filers) currently pay 1% gain tax at the time of transfer, while ‘Non-Filers’ pay 2%. It is proposed that the gain tax for ‘Filers’ be decreased to.25 percent (point Two Five Percent), but the gain tax for ‘Non-Filers’ should stay at 2%. (Two Percent).
Immovable Property Capital Gains Tax
With a flat rate of 5% (Five Percent), the maximum time for assessing gain tax could be reduced to three years instead of four. Reducing the maximum period for calculating gain tax to three years at a rate of 5% (five percent) will increase sales and stimulate the economy.
RERA stands for Real Estate Regulatory Authority.
The government has passed the Real Estate Regulatory Authority (RERA) bill 2020 through the National Assembly and Senate, but it has yet to be implemented in the Indian Capital Territory (ICT).
If it is adopted, it is estimated that 70 to 80 percent of real estate difficulties will be resolved. The formulation of RIM and its proper implementation, similar to that of other developed countries, is urgently required. The government’s action will make it easier to remove various roadblocks in the real estate sector.
Real Estate Sector Receives Special Relief
It is proposed that the Prime Minister take significant measures/announcements to further enhance the current Real Estate Sector. In this regard, Transferring/Registration Authorities/Societies such as CDA/LDA/KDA/ Bahria Town/DHAs shall cut Membership fees, Transfer fees, and Possession/Site Plan expenses by at least 50% (Fifty Percent).
Realtors’ service fees (commission)
By ordering all registration/mutation/transferring authorities and societies to legalise the two percent (2%) service charges (Commission) on sale/purchase transactions from each side and one (1) month rent on lease/rental deals from each side, the government should legalise the two percent (2%) service charges (Commission) on sale/purchase transactions from each side.
It is strongly recommended that when preparing the Federal Budget for the Real Estate Sector for 2022-23, these issues be taken into account.
