ISLAMABAD: The deadlock between the real estate sector and the Federal Board of Revenue (FBR) over the current value of properties in the three main cities of the country persisted on Thursday.
However, the FBR has agreed to market rates provided by realtors.
The government team, led by Special Assistant to the Prime Minister on Revenue Haroon Akhtar, held a meeting with realtors’ representatives to discuss the list of current property prices in 18 cities of the country.
“There is no issue with current market rates in most cities in the list. But property prices in Karachi, Lahore and Islamabad do not match the market survey conducted by the FBR,” Mr Akhtar said.
He added that a six-member subcommittee, consisting of real estate agents — one each from Lahore, Peshawar, Quetta, Islamabad and two from Karachi — were scheduled to meet the FBR officials to compare the rates determined by the FBR and those provided by them.
Another meeting of the 13-member committee of the real estate sector is scheduled to be held on Friday (today) to further discuss the matter. A finance ministry official said that it is likely that Finance Minister Ishaq Dar would be attending the meeting too.
“The meeting is scheduled after Friday prayers and will give representatives from the real estate sector and the FBR an opportunity to chalk out a middle ground, agreeable to all sides,” the official added.
The 13-member committee is led by Federation Of Pakistan Chambers Of Commerce & Industry President Rauf Alam and includes the Association of Builders and Developers (ABAD), the premier body of property developers and real estate agents.
“Our main concern is that if there is instability in the real estate market, the sale and purchase of properties will suffer, which will eventually lead to a loss of business for the builders and developers,” said ABAD Senior Vice Chairman Arif Jeewa.
“But we do not want to deprive the government of the due taxes, so this matter should be resolved at the earliest,” he added.
A realtor told Dawn that after property rates were settled, they would take up matters related to the rate of Capital Gains Tax (CGT) and Withholding Tax on the sale and purchase of property.
Though the government had increased tax rates on the sale and purchase of land and other properties in the federal budget 2016-17, but issues arose when a decision was made to appoint ‘valuators’ to determine the current market prices of the properties under consideration.
The government increased the rate of CGT to 10 per cent in the budget for 2016-17 on disposal of immovable property if it was being sold within five years of acquisition. Earlier, it was a two-year period and the tax rate was between two to five per cent, whereas if the buyer held the property for more than five years, it would be exempt from CGT.
In the Finance Bill 2016, withholding tax on the purchase and sale of immovable properties for tax filers and non-filers was also increased.
For the sale of property, the rate has been increased from 0.5 per cent to one per cent for filers and from 1 per cent to 2 per cent for non-filers.
In the case of purchase of property, an increase from 1 per cent to 2 per cent and 2 per cent and 4 per cent for filers and non-filers, respectively, has been made.
Published in Dawn, July 29th, 2016
