Laws are frequently enacted and amended in Pakistan. No sooner the government makes a law than a needs arises to amend it. The laws are amended to the extent that they not only lose basic objectives but also add new complexities to them at implementation stages. The ultimate decision on a specific law is taken by the authorities on their will and vision and the people are the ultimate losers at the end. The government introduced new rules and regulations for the real estate developers to collect revenues, but the attempt not only backfired but also ruined the whole business. The real estate sector has lion share in the industrial development as it is very much attached to the construction industry. Hundreds of industrial units are associated with construction industry and slump in the real estate business means recession in the entire construction industry. The real estate sector is also major attraction for investors. Once the laws are made to witch-hunt the investors, they will look towards foreign destinations to save their money. And this happened when the government introduced new rules of business in the federal budget for the current fiscal year. Out of thousands of real estate dealers and investors, a few are left in the field.
The National Assembly has approved an amnesty scheme for the real estate sector by which the buyers will be allowed to clean up their huge undeclared transactions. Qaiser Ahmed Sheikh, chairman of the National Assembly’s Standing Committee on Finance, announced that the amendment to the income tax law will be acceptable to all stakeholders, including real estate agents, builders, developers and the tax collection authorities. The amendment will remove the gap between the basic rates at which most of the registries are signed at the deputy commissioner’s office and the valuation by the Federal Board of Revenue, determining the property prices. The amendment envisages a formula ‘A-B’ for computing the amount where ‘A’ is the value of the property determined by the FBR officials and ‘B’ is the value recorded by the authorities registering or attesting the transfer. The formula will be applicable only if the value A is higher than the deputy commissioners’ rates.The buyers will have to pay three percent of the difference between the A and B and the FBR will not ask about the source of their income.Under the scheme,the buyers will be exempted from declaring their source of income after paying three percent tax on differential.
Under the formula, all the three stakeholders will benefit from the amnesty scheme as the buyer will become a filer,the FBR will getthree percent tax from the sector and the buyer will also be happy for not declaring the source of income. The government had failed to think over this scheme of things before introducing the law in July this year.
