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Taxation measures: National Assebly panel to examine veracity of estate agents’ claims


With the help of the Federal Board of Revenue (FBR), a panel of National Assembly Monday decided to cross-check the claims made by property estate agents that realty sector is heading to a collapse following taxation measures on buying/selling of immovable properties.

A meeting of the subcommittee of the National Assembly Standing Committee on Finance held here in the Parliament House on Monday noted with concern that the real estate sector is becoming a 'bubble' and huge amount of black money is being parked in sale and purchase of properties. The subcommittee decided to cross-check the claims made by property dealers that realty sector is heading towards collapse due to the measure taken by the government.

The subcommittee has been formed to resolve the anomalies with respect to valuation table on property tax by the FBR. Syed Mustafa Mehmood of Pakistan Peoples Party Parliamentarians (PPPP) said, "Just looking at the sector we can understand that property business has been a bubble for last few years." He added it is bound to crash sooner or later. So it is better to inject the resistance rather than waiting and seeing its burst.

The subcommittee chaired by MNA Mian Abdul Mannan of Pakistan Muslim League-Nawaz (PML-N) downplayed the report submitted by the real estate agents coming from Karachi, Lahore and Faisalabad, and said that the sector is trying to mislead the authorities and portraying an incorrect picture that the sale and purchase of properties is on the decline.

A real state sector report was also presented in the subcommittee by the Pakistan Real Estate Investment Forum (PERIF). The report by the real estate sector highlighted that the property business has suffered after the government's decision that the FBR would value the properties to impose taxes at the time of its sale and purchase. President PERIF Shaban Elahi said the investors have been reluctant to invest in certain areas due to drastic jump in taxations.

These anomaly areas identified were SITE Industrial Area Karachi, Port Qasim Authority Industrial Area, Landhi Industrial Area, Karachi, Anmol Co-operative Society Lahore, DHA Valley Islamabad, Kanal Road, Faisalabad and DHA city Karachi. The PERIF members also said that it was a partial list, but they are facing business slowdown across the country.

When chairman of the subcommittee asked the FBR officials to present their viewpoint, Senior FBR Member Tax Policy Rehmatullah Wazir quoted, "The average market value of plot in DHA Phase 8, Karachi, is Rs 50 million, but the taxes are filed at Rs 900,000 only, yet again you are saying that we are taxing too much, similarly you say that the market rate in Port Qasim is Rs 800 per square yard and the DC rate is Rs 1,300 per sq yard- tell me can the DC valuation rate for taxation be higher than the market rate of property."

He added that the real estate transactions have increased after this system to streamline the real estate business has been introduced in the budget of current year. The FBR members including FBR spokesperson Dr Muhammad Iqbal shared several grounds realities related to the real estate sector and highlighted that black money is being parked in properties and these investors are pushing the market value beyond the reach of common citizens.

Tax officials pointed out that buying a house or residential land is already out of reach of an ordinary citizen, so something has to be done to bring this sector under control. Meanwhile, Syed Mustafa Mehmood said if there was a genuine demand than those who were buying land would not have left it unattended, they would have built a house. "We need to document the real estate sector and I think that a minor small crash of prices will benefit the ordinary Pakistanis with white money," he added.

Concluding the meeting, Mannan said the real estate sector of Pakistan cannot be compared to that of Dubai where the real estate sector has become mature. "I want to make it clear that we want to document this sector. This regime introduced in the budget 2016-17 is not a short-term measure and we will continue to streamline this sector," Mannan added.

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