LAHORE: The recently levied 0.3 percent withholding tax on non-filers of tax on all banking transactions, exceeding Rs 50,000 a day, is stalling real estate market activity, according to Pakistan’s best real estate website, Lamudi Pakistan.
The real estate sector of Pakistan had already been facing a slowdown in the first quarter of 2015 and with this newly imposed tax, which requires the property investors and brokers to pay 0.3 percent on every banking transaction above Rs 50,000, its growth is expected to decline further.
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It negatively affects the profit margins of real estate investors, discouraging them from investing in this sector. It also promotes non-banking and cash transactions amongst the non-filers that gives rise to the informal sector in the economy and could lead to more fraudulent activities being carried out in the property market.
According to Saad Arshed, Country Director of Lamudi: “This withholding tax will not only deter investment in the real estate sector but also contribute to inflation as the burden will be passed over to the homebuyers, who will have to pay higher prices at the time of purchases.
