KARACHI, June 16: The Sindh government has sought comments from taxation experts and stakeholders on the possibility of imposing sales tax on real estate agents, and the finance department has already sent letters to the Board of Revenue and secretaries of other ministries for their comments.

Taxation experts have described the idea to impose sales tax on estate agents dealings as ‘vague’ as it does explain the rate of the tax as well as modus operandi of collection.

A government tax expert told Dawn on condition of anonymity that the first and foremost consideration before levying the tax should be about the common man, who would be affected as the tax would ultimately be passed on to the people renting, selling or purchasing a house.

He suggested that the tax, if imposed, should be collected from estate agents on rental value of over Rs10,000 and the value of property changing hands should be higher than Rs5 million.

Raja Mazhar, President of United Defence Clifton Estate Agents Association, said that the government should enact bylaws for the estate business and all transactions should be carried out through an estate dealer.

He said at present estate business was suffering losses due to non- payment of estate dealers commission by customers, who after visiting a house or shop through a estate dealer, try to make a direct deal with the owner.

Raja Mazher said the law should entail punishment to customers not paying the dealer’s commission after making a deal.

S M Ather of Gulshan-i-Iqbal and Gulistan-i-Jauhar Estate Agents Association said the tax would help document real estate business, which is presently unorganised.

The experts said the sales tax, if levied, would have to be collected by the Federal Board of Revenue as the Sindh government has no proper collection mechanism.

The proceeds will be transferred to the Sindh government under an agreement.

Provinces are already complaining about their share in sales tax collected from their region.

The proposal has been floated just a few days before the Sindh budget and experts believe that the levy might have been planned for the budget 2009-10.

Also the finance department in the last finance bill fixed collection targets for some new taxes, including tax on foreign air travel, education and health but these taxes were never collected as no SRO and procedure of enforcement was announced.