ISLAMABAD: Mohsin Sheikhani, the chairman of the Association of Builders and Developers of Pakistan (ABAD), has expressed serious concerns over the reported move of the Federal Bureau of Revenue (FBR) to abolish Fixed Tax Regime (FTR) for builders and developers.
Addressing a press conference at the National Press Club flanked by Senior Vice Chairman ABAD Muhammad Hassan Bakshi and former Senior Vice Chairman Arif Yousuf Jeewa, he said that this move would not only discourage investment in the construction industry but would again open the floodgates of corruption in the country.
He said that members of ABAD have deposited Rs 150 million as 5 percent advance tax under the FTR during the last four months of the current fiscal year, which reflects a total FTR of Rs 3 billion, while the ABAD has committed to the FBR that this sector will pay tax from Rs 2 billion to Rs 3 billion.
He said that we have also said last year that the construction sector is paying almost Rs80 million of minimum tax, which will be increased ten times if a corruption free Fixed Tax Regime implemented for builders and developers.
But before this new mechanism could start working, the FBR brought the issue of new property valuation virtually blocking the way of new construction for almost six months and we could get NOCs for new construction from January 2017 and members of ABAD has paid Rs150 million as 5 percent FTR during four months and 20 days.
In all the real estate sector has paid total taxes of Rs18.50 billion under various sections of Income Tax Ordinance including section 7-C, 7-D, 236-C, 236-K and 236-W. Moreover, we expect more Rs4 billion tax collection form this sector during last one month and ten days of current fiscal year, which will bring to a total collection of Rs22.50 billion. Thus you can judge how much this sector is contributing to the national kitty, he added.
On the other hand, it is the fact that members of ABAD are involved in 25 percent of all construction activities of the country while other players are responsible for 75 percent construction throughout the country.
He said that members of ABAD are more than willing to pay taxes and the government should give chance to FTR for at least three years instead of taking any decision on the basis of four months.
The FBR should not press only ABAD members to realize tax target but also put its own mechanism to get advance tax from other people all over country who are going to construction a building or a house, he said adding that the government accepted only two suggestions of ABAD for current fiscal year instead of four suggestions of the association.
Had the government accepted all four suggestions, tax collection could have been far better, he lamented. Coming to the Low Cost Social Housing, being built by ABAD, Mohsin Sheikhani said that at present Pakistan is facing a shortage of 12 million houses and almost 0.25 million housing units are added into this shortage every year.
