ISLAMABAD: Finance Minister Ishaq Dar Friday directed the Federal Board of Revenue (FBR) to immediately convene a meeting with the real estate sector to work out new rates of immovable properties across the country.

The FBR agreed to have a meeting with the real estate sector at the FBR House on Saturday (August 5).

During the meeting of the National Assembly Standing Committee on Finance held on Friday, the real estate sector requested the FBR to stop the FBR from increasing the values of immovable properties in August 2023.

NA panel told: Property transfers, registration halted due to Section 7E ITO

Dar directed the FBR to look into the matter whether it is possible to stop the next increase in the valuation tables of the immovable properties in light of the reservations of the real estate sector.

Tariq Bajwa, Special Assistant to the Prime Minister on Finance, interrupted that the values of the immovable properties have not been raised in the last 1-2 years.

The representatives of the real estate sector made a hue and cry in the committee that the increase in the valuation rates of immovable properties was linked with no increase in taxes on buying and selling of properties. Contrary to this, the FBR has considerably raised taxes on the real estate sector through the amended Finance Bill, 2023.

Moreover, there is no IMF condition to increase the values of immovable properties and it is the pure discretion of the FBR to increase the values of immovable properties or not. Thus, the FBR should not raise values of immovable properties under the cover of any IMF condition, they added.

The committee took notice of the challenges besieging the real estate sector, particularly due to the amendments to the Finance Act of 2023. It underscored how the introduction of Section 7e has triggered stagnation in the sector, deterring prospective buyers and jeopardising around four million jobs linked to the industry. Consequently, the committee directed Member (Legal), FBR to engage with the Real Estate Federation to rectify issues related to Section 7E and devise a mutually beneficial solution that aligns with the state’s policies.

Governor State Bank of Pakistan (SBP), Jameel Ahmed, while briefing the committee on the TERF initiative revealed that out of the total 629 projects, 469 were fully operational, 89 partially operational, and the remaining 62 were expected to be operational by June 2025. He estimated that the TERF initiative would create approximately 194,300 jobs and generate 11 billion rupees of revenue in the upcoming years through export earnings and import substitutions.

Moreover, committee members from Sindh expressed their apprehensions about the hardships of farmers in flood-affected areas, particularly widows, struggling with agricultural loan interest payments. The committee urged the minister of finance to provide relief by suggesting that state-owned banks collect only the principal amount, forsaking the exorbitant interest. Furthermore, the committee demanded complete debt relief for the widows.

In an urgent call for transparency and accountability, the Committee seeks a comprehensive delineation from the SBP about the approval procedures and norms associated with the concessionary loan schemes in question. The committee’s curiosity is piqued over potential abnormalities that could see loans being redirected towards real estate investments rather than their prescribed purpose of enhancing exports through industrial machinery installation.

The committee is eager to explore possibilities of the loan funds being illegitimately transferred overseas or machinery being under-utilised. They also express concern over the SBP’s apparent lack of follow-up oversight regarding loan utilisation.

In response, the governor SBP reiterated that the sanctioning of such concessionary refinancing was approved under the provisions of the SBP Act, 1956, just like other schemes such as the Long-Term Financing Facility (LTFF) for export and non-export projects.

He clarified that the SBP played no part in selecting the borrowers or disbursing the funds and that the total credit risk was undertaken by banks or Development Finance Institutions (DFIs). The banks and DFIs, he added, were directed to exercise due diligence in disbursing finances to borrowers.

The governor further stated that the financing under TERF was strictly for the procurement of new plants and machinery and was exclusively against Letters of Credit (LCs) or Irrevocable Letters of Credit (ILCs).

He emphasized that the responsibility of ensuring that the funds were used for their intended purposes lay solely with the banks and DFIs. He also pointed out that neither the SBP nor the Government of Pakistan were providing risk coverage.

The committee decided to write a letter on behalf of the Standing Committee of Finance and Revenue to the chief justice of Pakistan, requesting urgent daily hearings on the review petition related to the non-disbursement of pensions for over 10,000 aggrieved former National Bank employees.

Besides the Minister of Finance, Senator Ishaq Dar, and Chairman MNA Qaiser Ahmed Sheikh, the meeting was attended by MNAs; Ali Pervaiz, Dr Nafisa Shah, Makhdoom Syed Samiul Hassan Gillani, Dr Ramesh Kumar Vankwani, and Syed Ali Musa Gillani. The meeting was also attended by the senior officers from the Finance Division, the SBP, the National Bank of Pakistan (NBP), the FBR, and representatives from Real Estate Federations.

Copyright Business Recorder, 2023