LAHORE: The Punjab Federation of Realtors (FOR) has demanded the government withdraw an amendment in the budget relating to taxable gain on disposal of immovable property Thursday.
As per the amendment in Section 37 of the Finance Bill 2021, if taxable gain on disposal of immovable property exceeds five million rupees, it shall be chargeable to tax under the normal income tax rates. These rates can go as high as 30%.
“This has changed the gain on capital income and brought it under the normal tax regime,” said Muhammad Ahsan Malik, Vice President FOR, speaking to media persons.
“On the one hand, the government says it is not imposing any new tax and then this happens,” he added.
Malik lamented that Finance Minister Shaukat Tareen did not even mention the real estate sector during his budget speech, adding that the sector has been paying a sizable amount of tax to the government each year.
The amendment also states that for persons habitually engaged in transaction of sale and purchase of immovable property, their income will fall under the business income category.
Malik opposed the move, adding that as per the amendment, the tax rate for this income can go as high as 30%. “The least they could have done was define the word habitual,” he said.
When asked how the realtor sector was reacting to the amendment, Malik said people had not properly read through the budget document. However, he said the move would have an adverse impact on the sector and as a result, on the economy, once people get to know about the amendment.
“This is the only sector that has revived its economic activity to some degree,” he said. “This amendment should be taken back otherwise, economic activity will suffer,” warned Malik.
Malik said when the FBR computes the gain on capital gains and includes it in the normal income tax rate, and income under the “other” head is also accumulated with it, the tax rate can shoot up to 35%.
“This foolish step should be undone immediately,” said Malik. “This is the only sector generating economic activity and if this step is not taken back, it will have adverse effects,” he added.
