RAWALPINDI: The Rawalpindi Chamber of Commerce and Industry (RCCI) on Sunday demanded that the government should withdraw the property tax on rental income proposed in the federal budget 2022-23.

It said the government has proposed that those who own more than one immovable property worth over Rs25 million shall be deemed to have received a rent equal to 5pc of the fair market value of the property and shall pay a tax at the rate of 1pc of its market value.

It said the proposed tax will affect the construction sector to which over 40 allied industries are connected.

RCCI President Nadeem Rauf and group leader and former president Sohail Altaf said in a joint statement that more incentives should be given to the construction industry to increase business activity.

“Overseas Pakistanis invest heavily in the construction sector. The proposed measure would be tantamount to taxing those who send remittances to the country. The property tax should be reviewed to attract more foreign investment and restore investor confidence in the country.”

The proposed tax on rental income will increase the dispute between the property owner and the tenant. The tax officer has been given extra powers on fair value assessment and it is feared that the officer will exceed their powers, increasing the chances of bribery, they added.

Mr Rauf also urged the government to consult stakeholders on a fixed tax on small traders.

“Legal experts have also expressed serious reservations about section 7E in the Finance Bill. The federal government is not entitled to levy tax on the capital value of real estate,” he added.

Mr Rauf demanded that a significant amount be allocated in the Punjab budget for the Rawalpindi Ring Road project, which had been delayed for many decades. Funds should also be allocated for Kutchery Chowk and Defence Chowk projects, he added.

Mr Altaf added that a tax ombudsman should appointed at the provincial level for resolving tax disputes linked with the Punjab Revenue Authority, excise and taxation.

Published in Dawn, June 13th, 2022