The government is fleecing the public by imposing several taxes including Transfer Fee, Capital Value Tax (CVT), Provincial Stamp Duty, Cantonment Board Tax and Transfer of Immovable Property Tax (TIP) on sale and purchase of properties.
If the govt remains stick to its policies of imposing more taxes on real estate than no one can stop the capital to fly once again to Dubai because of their liberal tax policy.
A purchaser of one kanal house has to pay Rs 7,00,000 to Rs 8,00,000 in the head of all these taxes. In case of one kanal plot in a developed society like DHA, the purchaser has to pay around Rs 4,00,000 in the form of above mentioned taxes and if it is of 2 kanal plot the amount goes to Rs 7,00,000.
This was stated by Maj (r) Waseem Anwar Ch, President of DHA Estate Agents Association, in a letter written to Editor-in-Chief The Nation Majid Nizami on Tuesday.
Maj (r) Waseem lamented when CVT was levied, it was declared the province would not levy any tax, but last year Punjab CM Shahbaz Sharif levied the Provincial Stamp Duty and added that Punjab is the only province, which has levied stamp duty as no other province has levied any stamp duty.
He demanded the government to streamline the tax policy.
He said that Shaukat Tarin, despite his repeated pledges, announced no tax on stock exchange, agriculture and textile but doubled the CVI tax on real estate.
Further he announced to convert CVI into Capital Gain Tax, which will once again open a pandora box, giving free hand to Revenue Department to black mail a seller while assessing capital gain, Waseem Anwar stated.
He maintained: “Real estate is not just the matter of selling or purchasing of plots. When a buyer starts constructing house, he helps 28 other industries including cement, brick, steel, ceramic, cable and glass industries etc.
Besides skilled and unskilled manpower gets job opportunity. In 1 Kanal house, around 15 Lakhs is paid to skilled or unskilled workers in shape of wages. So, housing sector really helps other industries. Thus there is a need that govt should encourage this sector. Govt should not try to levy more taxes otherwise flight of capital will be in offing immediately after passing of finance bill.”
He observed that in 2002, govt provided soft loans to textile sector under (BMR) balancing and modernisation scheme on interest rate of 3pc to 4pc. The recipients of the loans instead of importing machinery for textile put the major money in real estate sector. This resulted in shooting up of the property price.
He further said that a plot worth Rs 14,00,000 went up to Rs 60,00,000. All the major investors bailed out their property by mid 2004, and started investing in UAE, Singapore, and Malaysia, he added.
He further observed: “The liberal polices of the UAE govt attracted investors all around the world and the stakeholders emptied the banks and transferred the capital through ‘Hundi’ to Dubai. Why? In Pakistan if you invest Rs 50 million and build a plaza of 100 sq foot your net income will be 4 to 5 per cent/PA. The same amount if invested in Dubai, the net income will be 10 to 11 per cent /PA. So, this was the difference which attracted the investors to shift their capital to Dubai. Even now when in Dubai the rates have fallen up to 50 per cent, people are still investing in Dubai market only because of their libral tax policy. In our case, our ‘Baboos’ always try to make such policies which force the capital keeping on flying from country.”
The president of DHA Estate Agents Association pointed out that real estate is the only sector, which does not borrow any money from the govt, as compared to others including textile, sugar and cement sectors.
This is the fact that all the above mentioned sectors borrow money, get the loan written off, get subsidy in one way or the other but on the other hand real estate sector brings foreign exchange from Pakistanis living abroad, he said.
Waseem Anwar viewed that if the govt remains adamant to impose more taxes on real estate than no one can stop the capital to fly once again to Dubai.
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