ByThe real estate sector urges for a Rs 50 million exemption in the Tax Laws (Amendment) Bill, 2024 to encourage investment and ease regulatory burdens.
The real estate sector has called for an amendment to “The Tax Laws (Amendment) Bill, 2024” that would exempt property transactions worth up to Rs 50 million from requiring buyers to disclose their source of income. This proposal is aimed at easing regulatory burdens on property buyers and encouraging investment in the real estate market, which is a critical sector for Pakistan’s economy.
Currently, the proposed bill mandates that individuals can only purchase property worth up to 130% of the liquid assets they declared in their previous tax returns. If the property value exceeds this threshold, buyers are required to justify the source of their investment, providing documentation on the funds used for the transaction.
Real estate stakeholders, including prominent figures in the industry, argue that this provision could have adverse effects on the market, potentially discouraging investment and driving capital out of the country. They propose a temporary exemption for property transactions up to Rs 50 million, at least for a year, in order to boost the market, encourage formal registrations, and help stabilize the industry.
A sub-committee of the National Assembly Standing Committee on Finance and Revenue, led by Bilal Azhar Kayani, has been formed to discuss an appropriate exemption threshold. The committee was set to meet on Friday at the Federal Board of Revenue (FBR) Headquarters, but the meeting was postponed due to logistical issues. The new meeting will take place next week.
During earlier discussions, several key figures in the real estate sector, such as Arif Habib, chairman of Arif Habib Dolmen REIT Management Limited (AHDRML), and representatives from the Association of Builders and Developers of Pakistan (ABAD), participated virtually. In a previous meeting, Dr. Najeeb Memon, FBR’s Member Policy, mentioned that the board had considered allowing property transactions up to Rs 10 million without the need to disclose the source of income, but the decision had not yet been finalized.
The real estate sector, which plays a significant role in the national economy and contributes heavily to tax revenues, has raised concerns that the proposed tax regulations could stifle growth. The sector is already taxed heavily, with an estimated tax burden of around 115%. Further regulatory constraints could discourage potential investors, they warn.
Furthermore, industry representatives fear that stringent tax policies could lead to capital flight, with investors moving funds to foreign markets, particularly Dubai, which is known for its attractive real estate environment. They suggest that tax authorities should verify the information provided by property buyers at the time of registration, rather than imposing preemptive restrictions on property transactions.
Real estate professionals have urged the government to adopt policies that incentivize investment in the sector, particularly for corporate developers, to help foster growth in the formal property market. ABAD has also submitted recommendations to the sub-committee, advocating for measures that facilitate rather than hinder real estate transactions.
As discussions continue, the real estate sector remains hopeful that the government will adopt a balanced approach to taxation and regulation that supports the growth of the market and ensures continued investment in Pakistan’s real estate industry.
