Reduction in transfer fee, taxes for filers demanded in new budget

Senior Real Estate Analyst Muhammad Ahsan Malik has submitted budget proposals for real estate sector to Federal Minister for Finance and Revenue Mr Miftah Ismail.

He demanded a reduction in property transfer fees and advance income tax and capital gain taxes for filers on immovable property and empowering the Real Estate Regularity Authority.

In a detailed letter, Ahsan Malik demanded the government take some concrete and bold steps for Pakistan's Real Estate Sector which an immense contribution to the economy.

He explained that four methods are currently in practice for property valuation in the country; federal government charges its taxes on the FBR valuation while the provincial government charges taxes on DC rates and cantonment boards apply taxes on their own valuation, however, market rates depend on the prevailing market conditions and government policies.

To avoid this confusion of four different valuation rates, the senior real estate analyst suggested that Section 68(4) of Income Tax Ordinance 2001 should be excluded immediately, while property valuation should only be done by provincial governments that have field forces of their revenue departments.

He also requested the government that property valuation should only be done every year and once in a financial year.

Ahsan Malik also suggested that taxes i.e. advance income tax and capital gain taxes should be reduced to .25% for 'Filer' and for ‘Non-Filer as it would increase the economic activity in the country.

He stressed that the maximum period for determining gain tax may be fixed at three years instead of four years, with a five per cent flat rate as this initiative would enhance the sale/purchase activity and boost the economy.

The senior analyst said the Government passed Real Estate Regulatory Authority (RERA) Bill 2020 from National Assembly and Senate for the Islamabad Capital Territory (ICT) only, but still, it has not been implemented. “If it is implemented then at least 70 to 80% issues of Real Estate Sector will be settled. There is a dire need for the formulation of RERA and its proper implementation just on the lines of other developed countries,” he said.

Ahsan Mailk also demanded a special relief package for the real estate sector, saying that membership fee, transfer fee, possession/site plan charge setc. must be reduced at least 50%.

The senior real estate sector analyst said the Government should legalize the two percent service charges (commission) on the sale/ purchase transactions from each side and one month rent on lease/rental deals from each side by ordering all registration/mutation/transferring authorities and societies.

Ahsan Malik concluded that the real estate sector would serve as a catalyst for the revival of the economy if given due importance and attention by the government.