Realtors have been irked by the government’s plan to tax the capital gains of Rs 5 million and above on sale of immovable property and bring property taxation under normal regime as they have dismissed it terming it “impractical” and have been called to PM House on next week to discuss it for good.
In order to streamline its tax regime, the government has introduced many measures and has announced several proposals to achieve the aim that includes property taxation as well. In order to extend the normal tax regime, the capital gains tax has further been elaborated along the gains from these deals have also been brought under its control.
The recommendation in the finance bill 2021-22, the capital gain tax on immovable property was suggested to be fixed to flat five percent up to the capital gain amounting Rs5m unlike the previous tax rate range of 2.5pc to 10pc.
The move that aimed at reforms in the tax system to facilitate the sector has further complicated the system and is counter-productive as per the realtors. Who has dismissed the idea and would be addressing it in their upcoming meeting.
Dawn reported that the chairman of the Federation of Realtors Pakistan, Musarrat Ejaz Khan saying: “It’s absolutely impractical and also we are still confused and can’t understand the idea. On the one hand, the property tax is being brought under the normal tax regime and on the other capital gain tax is also there. It brings the real estate sector under multiple taxes slabs.”
Moreover, the chairman of the Naya Pakistan Housing & Development Authority’s (NAPHDA) think tank, Mr. Khan said that this is just a proposal that has been presented and we are optimistic that we will convince the concerned authorities about its counter-productiveness in our scheduled meeting the next week.
Given that the PTI government’s commitments towards facilitating the construction industry and real sector in the country, this proposal has surprised many realtors who find it complex and unavailing yet they have expressed hope that their concerns would be better addressed in the meeting.
Lastly, the finance minister in his pre and post-budget briefing repeatedly talked about making the tax system simpler as there have been some unnecessary complexities, yet this proposal in the real sector accounts for the contrary of what he said. But realtors are hopeful to address the issue in the next setting with the PM's finance team.