ISLAMABAD: D evelopers, builders have strongly proposed to the Federal Board of Revenue (FBR) to abolish Capital Value Tax (CVT) on foreign assets through Finance Bill 2023 to encourage voluntary compliance and documentation of real estate sector from July 1, 2023.
On Friday, Islamabad Developers Association (IDA) organized a conference with builders and developers of the Capital to discuss budget proposals in addition to working on a policy framework with the CDA primarily focusing on issues related to bylaws.
Sardar Yasir Ilyas Khan President of IDA stated that this is a community-led organization comprising developers and stakeholders involved in the development of Islamabad. The association is dedicated to promoting sustainable and efficient development practices that contribute to the growth and prosperity of the Federal Capital.
It was highlighted that section 236K of the Income Tax Ordinance related to withholding tax on sale and purchase of property has had a detrimental impact on property transactions due to the additional cost levied on non-filers. For sellers it has doubled to 4% and for non-filer purchasers it has gone up to 7%. Capital gain tax period should also be reduced to 4 years from 6.
The policy related to section 7E which applies taxes on deemed income on additional property has further led to a reduction in the purchase of properties due to the additional tax burden.
This has deterred both investors and end users from acquiring additional properties and overseas remittances would also decline further since most of those funds were also being invested in property.
Furthermore, CVT on foreign assets would discourage people from declaring their assets or becoming tax residents in Pakistan. Super tax on large-scale manufacturing has increased the cost of local materials in addition to the hefty custom duties and sales taxes plus sales tax levied by the government.
Due to the rupee devaluation against the dollar the cost of materials has already gone up significantly which has drastically affected the construction sector. Thus making properties more expensive and unaffordable for the average buyer since disposable income has not increased.
The industrial sector is also challenging the 8B policy from FBR related to adjustment of input tax which must be adjusted by 100% instead of 90% out which 10% is being carried forward every year thus affecting the cash flow of businesses.
The developers also emphasized on the Issues related to CDA with regards building approvals, completion certificates, processing of documentation which can be organized by digitization.
The conference was attended by several participants including Ch. Naseer (Chairman Maroof International Hospital & Silveroaks), Sardar Tahir (President IEAA & Federation of Realtors), Kamran Khalid, Awais Ali, Farhan Ahmed Syed Bilal, Ijaz Abbasi, Tahir Abbasi, Haji Aslam, Rizwan Aslam, Shahid Khan, Mohd Qasim, Shiraz Khan, Shaviz Riaz, Farooq Sheikh, Habib Abbasi, Umar Hussain, Yaseen, Saad Khan, Altaf Khan, Kamran Ghazi, Masud, Ahmed Ibrahim, Mian Adnan, Mustafa Bin Talha and Tariq Afridi.
Copyright Business Recorder, 2023