Provincial government should determine property valuation: real estate sector

Pakistan’s real estate sector has called on the government to shift the decision of determining property valuation from the federal government to the provincial governments.

Pakistan’s real estate sector, in its budget proposals for the next financial year, has requested the Federal Minister of Finance to immediately exclude Section 68(4) of the Income Tax Ordinance 2001, in addition to the assessment, which should only be done by the provincial government that already does it and is able to do it. as they already have a field force revenue department.

Similarly, the provincial government charges stamp duty based on its DC rates and it is suggested that the federal government also charges the gain tax/withholding tax based on its DC rates. During this time, property valuation should only be done annually and once per fiscal year.

Real Estate also stated in its recommendations that currently the registrant pays 1% and the non-registrant pays 2% in advance income tax on the purchase of the property.

It is suggested that this tax be reduced to 25% (point two five percent) for the “filer” and for non-filers it should remain at 2% as withholding tax can be claimed in a tax return by the “declarant”, it will be useful to increase economic activity in the country.

Capital gains tax-(236-C) for real estate

Currently sellers (filers) pay 1% tax on gain upon transfer of ownership and 2% by “non-filers”, it is suggested that for “filers” it should be reduced to 0 .25% (point two five percent) and for non-filers it should remain at 2% (two percent).

Capital Gains Tax – For Real Estate

The maximum period for determining the tax on the gain can be set at 3 years instead of 4 years, with a flat rate of 5% (five percent). Reducing the maximum earnings tax determination period to 3 years with 5% (five percent) will improve sales/purchase activity and stimulate the economy.

Real Estate Regulatory Authority RERA

The government has passed the Real Estate Regulatory Authority (RERA) Bill 2020 of the National Assembly and Senate for the Capital Territory (ICT) only, but has yet to be implemented. work.

If implemented, at least 70-80% of the problems in the real estate sector will be solved. There is an urgent need for the formulation of RIM and its proper implementation just on the lines of other developed countries. Such a measure by the government will facilitate the removal of various obstacles in the real estate sector.

Special relief package for the real estate sector

It is suggested that strong actions/announcements from the Prime Minister are made to further stimulate the prevailing real estate sector. In this regard, membership fees, transfer fees and possession fees / site plan fees must be reduced by at least 50% (fifty percent) by transfer / registration authorities / companies such as CDA/LDA/KDA/Bahria Town/DHA,

Real Estate Agent Service Fee (Commission)

The government should legalize the service charge of two percent (2%) on sale/purchase transactions on each side and one (1) month’s rent on lease/lease agreements on each side by ordering all authorities to registration / transfer / transfer and Companies.

It is strongly emphasized that these considerations should be taken into account when finalizing the 2022-23 federal budget for the real estate sector.