ISLAMABAD: Despite opposition by the Federal Board of Revenue (FBR), the National Assembly’s Standing Committee on Finance and Revenue has approved a one-time amnesty scheme for real estate sector under which realtors will have to pay only three percent tax for declaring their hidden assets in purchasing properties.
The recommendations now will be sent to the National Assembly for full-fledged debate and then the House will either adopt the said recommendations or reject them. In case the recommendations are adopted then they will be made part of budgetary proposals for the next financial year.
The committee met here with Qaiser Ahmad Sheikh in the chair to consider “The Income Tax (Amendment) Bill, 2016” (Ordinance No XLIX of 2001) (Government Bill) and other agenda items. Chairman FBR Nisar Muhammad Khan, Parliamentary Secretary Finance Rana Muhammad Afzal Khan, Secretary Finance Waqar Masood and others were also present in the meeting.
Mian Abdul Manan presented the recommendations of the sub-committee before the main committee. These recommendations have recommended, the federal government may charge 1% in total for withholding tax, advance tax from both (buyers/ sellers) and capital gain tax. Prevailing federal government taxes charged by FBR on property transactions approximately 3% to 6% of FBR valuation table and capital gain tax.
The federal government will charge 3% to 6% and capital gain tax on FBR value or 1% of fair market value whichever is higher. This 1% will be inclusive of all advance/ adjustable federal government taxes including capital gain tax.
3% additional tax by FBR may be charged to the extent of the amount they are not able to reconcile in their wealth statement. The scheme must be only available for the people engaged in real estate transactions. The areas where valuation has been done on higher side by FBR may be rectified immediately with consent of the stakeholders.
However, Rana Muhammad Afzal Khan and Nisar Muhammad Khan opposed the said recommendations. Members of the sub-committee were of that implementation of laws related to the increased withholding tax, capital gain tax and advance tax on property transactions had hurt the real estate business to the extent that people had stopped the making transactions in this regard.
However, Dr. Muhammad Iqbal was of the viewpoint that it was misperception because the tune of revenue collection from this sector had increased, but Mian Manan and Abdul Rashid Godil were of the stance that it had only happened because the people had made agreement for the sale/ purchase of lands. However, this process has been completely stalled now.
Responding to Customs Today about upcoming scenario in the House where members of the treasury benches will be giving opposite stances on one bill, Rana Muhammad Afzal Khan said that these people had vested interests therefore they were pressing for their recommendations in favour of real estate sector.
However, Mian Manan and Rashid Godil were of the viewpoint that imposition of FBR’s recommendations would be disastrous for the entire real estate sector as well as foreign direct investment (FDI) in real estate sector. Pakistanis have billions of dollars abroad, but they want to invest in Pakistan, not in any other sector, but real estate one.
However, such heavy taxation on non filers is main hurdle in this regard, therefore, one time amnesty must be granted to people willing to expose their non-book money which is no doubt, is not black money” they said. Actually, they said that Pakistani immigrants transfer money through proper channels to the countries but their recipients are often non-filers, therefore, levying withholding tax on this money is quite unjust.
Talking to Customs Today before the meeting of standing committee, FBR Chairman Nisar Muhammad Khan ruled out the possibility of introducing any new tax amnesty scheme in near future.
Nisar Khan was of the stance that FBR tried to get closer to the fair market rate of immoveable properties by notifying the rates. However, on the recommendation of the committee, FBR may review the process of valuation of rates of immoveable properties in the upcoming budget” he observed.
