ISLAMABAD: Property tycoons on Wednesday proposed the FBR to jack up DC rates for valuation of immovable property for future transaction and finalise a road map for enhancing these rates by every year as well as imposing fixed tax at the rate of 2 to 5 percent for regularising past transactions.
For transactions done before July 1, 2016, both sides agreed to come up with amnesty like scheme, through which, the opportunity will be provided to regularise transaction by paying one time fixed tax in the range of 2 to 5 percent.
Now the government will finalise its rate after convincing property tycoons and builders to evolve consensus on valuation of immovable property for future transactions.
FBR high-ups and representatives of property tycoons held parleys on Wednesday here at the Board’s headquarters and finalised package to end lingering controversy over valuation of immovable property. “We held constructive discussions on valuation of property and after listening to their proposals, now Finance Minister Ishaq Dar will be briefed on Thursday (today) after which the package will be finalised,” Special Assistant to PM on Revenues Haroon Akhtar told The News here on Wednesday night.
However, the sources said that the property tycoons proposed to the FBR to jack up DC rates by 50 percent and remaining 50 percent in three to four years instead of valuation mechanism done through SBP teams.
According to the sources, the FBR high-ups made up their mind to finalise ranges of valuation for different cities in consultation with the stakeholders concerned, but in order to avoid long time, the FBR could come up with ranges of valuation of property from 2 to 12 on the area basis. In the metropolitan, like Islamabad, Karachi and Lahore, the FBR will have to finalise categories in the range of over 10 to 15 types. Now breakthrough is expected between both sides for devising formula for valuation of immovable property.
On the conclusion of second round of talks between the builders/ real estate associations and Special Assistant to the Prime Minister on Revenue Haroon Akhtar at the FBR House, one participant told this scribe that the joint committee principally agreed to take away the existing procedure of valuation of immovable properties. The new valuation system has been totally rejected by the industry.
Moreover, it has been proposed to restore the previous system of DC rates valuation with enhancement in the rates if necessary. In budget, it was announced to extend the holding period for taxation of capital gain on sale of immovable property from two years to five years to be charged at uniform rate of tax of 10%. This period may be resorted to old status of upto 2 years.
The FBR had decided to constitute a 13-member committee, comprising representatives of real estate builders and association for finalisation of the recommendations of the real estate associations, for revision of the tax regime on real estate sector, including valuation of immovable properties.
On conclusion of meeting at FBR House, Chaudhry Abdul Rauf, President, Islamabad Estate Agents Association (IEAA), said that the government is seriously considering their viewpoint for expected amendments in the law or changes through income tax rules to be framed by the the FBR.
They said that the government has the option to enhance the DC rates on immovable properties and improve existing system for assessment of market value of the properties. In the presence of globally accepted system of DC rates, there is no justification to appoint valuers for assessment of immovable properties.
Presently, the value of any property for the purpose of taxation, commercial or residential is quoted as its deputy collector rate. All types of taxes are applied on the deputy collector value of the property.
The doubling of withholding tax on buying and selling of immovable properties has been done without taking into confidence the concerned sector. He said that the Finance Act 2016 has levied capital gain tax at the rate of 10% on sale of a property held for a period up to five years, whereas, capital gains on property sold after holding for a period of more than five years were exempted from tax. This measure would also have negative impact on buying and selling of properties. Across the globe, buying and selling of property is a profitable business. Different countries offer lucrative schemes to foreigners for investment in the real estate sector.
