Implications of valuation tables of immovable properties: ABAD to make presentation before NA body today

Association of Builders and Developers (ABAD) would request the National Assembly Standing Committee on Finance on Wednesday (October 26) to defer implementation over the Federal Board of Revenue (FBR) valuation tables of immovable properties for one year and propose an amnesty scheme for real estate sector. Sources said that the ABAD would make a presentation before the National Assembly Standing Committee on Finance over the implications of the FBR's valuation tables of immovable properties. It would share amnesty scheme for the said sector.
According to the association, the policy imposed by the FBR has created many problems for the provincial government, builders and developers, expatriate Pakistanis and common man who intend to purchase a house/ roof for his family. ABAD has rejected property valuation mechanism and has instead proposed to increase the DC value of properties in consultation with the provincial government gradually. It has also opposed the 100 percent increase in advance income tax, withholding tax and capital gain tax.
The FBR did not agree with the ABAD contention and imposed a new system of valuation and higher taxes on construction/ property business. The Board has rejected the proposal during a meeting with the FBR recently held at the FBR house. The FBR estimated that Rs 7 trillion of black money was being invested in the property business and the FBR want to bring this amount in the formal economy. The new system was implemented from July, 30 2016. The result of this unilateral imposition is known to everyone. The adverse effects on economy are evident from the fact that the construction and real estate activities have come to a sudden halt. The number of transaction has decreased by more than 80 percent. Moreover, the price of property is experiencing a free fall, at some places the prices have fallen more than 40 percent. Resultantly investment to which the FBR referred has been wiped out to the extent of more than 3 trillion, association claimed. The investors/ business men and the people having interest in Pakistan real estate have started looking for option beyond Pakistan.
People have started keeping extra amount in form of cash in lockers, which used to be invested in under construction project of Pakistan. It said that the expatriates Pakistanis have started investing their hard earned money in other countries to avoid investment in a free fall property market. 72 allied industries dependent on the construction industry have withheld their future expansion programs.
As the old projects are gradually getting near completion and no new projects are in pipeline. Slowly but surely we are moving towards increase in unemployment, which may affect our law and order situation, as we feel the root cause of crime is unemployment, association said. The revenue of provincial government has fallen more than 70 percent which itself is an alarming situation and two valuation tables one for FBR taxes and other for provincial taxes, is totally unacceptable and unworkable.
ABAD proposed that the federal government may defer the implementation of the new law for one year. During this period, the federal government, provincial government and all stakeholders must sit together with one point agenda. The government may introduce an industry specific declaration amnesty scheme for encouragement for investment in under-construction property/ plot without FBR inquiring about the source of investments for a period of five years as was done for investment in stock exchange of Pakistan. ABAD is very clear that only cosmetic solution will not solve the problem. It has to be a comprehensive policy where every segment attached to it comes out as winner.