The federal government is expected to promulgate a Presidential Ordinance to announce a comprehensive package for real estate sector after finalisation of the agreement between the Federal Board of Revenue (FBR) and real estate sector, covering a scheme for regularisation of past transactions of immovable properties.
On the conclusion of meeting among FBR, property dealers, builders and FPCCI here at FBR''s headquarters Friday night, official sources told Business Recorder that after reaching an agreement, the government will announce a comprehensive package under a Presidential Ordinance to revise values of immovable properties across the country, official added.
Official said that the FBR and the real estate sector have reached to the fair market value of properties almost in 20 cities across the country, however both sides will meet again on Saturday (July 30) to finalise the property values in Karachi. The things are on track and almost finished but discussions at some areas in Karachi remains to be finalised. The discussions mainly focused on cities including 12 from Punjab, three each in Sindh and Khyber Pakhtunkhawa and two in Balochistan and as well as Islamabad. The list also included different cities of Punjab including Lahore, Rawalpindi, Jhelum, Gujrat, Gujranwala, Faisalabad, Sargodha, Sialkot, Bahawalpur, Bahawalnagar, Murree and Attock. The cities in Sindh are Karachi, Hyderabad and Sukkur. The cities in KPK included Abbottabad, Peshawar and Mardan. The cities having increased property prices in Balochistan are Quetta and Gwadar.
Sources said that the FBR and representatives of real estate sector have narrowed down their differences over revaluation properties including in three major cities Karachi, Lahore and Islamabad. The ranges of revaluation will be around 35 minimum to 400 to 500 percent maximum depending on location of posh areas such as plots located in DHA and other housing schemes, the revaluation will be considerably enhanced by 400 to 500 percent.
Sources said that the tax authorities have categorically conveyed to the property dealers that the FBR has no intention to create fear in the market but there should be mechanism for bringing black money under the tax net. Both sides made hectic efforts to work out reconciled revaluation of property on basis of per square yard on three different categories where valuation will be increased to bring it close to fair market value.
Under the President Ordinance, the FBR is expected to disclose unveil amnesty scheme for regularising past transaction of property by imposing fixed tax within the range of 2 to 3 percent. The rates will depend that how much the property dealers allowed increasing revaluation rates and if they agree on higher rates then the incentives on regularising past transactions will be provided and if they give tough resistance then the FBR will propose higher rates for amnesty scheme.
During the ongoing negotiations at the FBR House, an incident took place when the representatives of property dealers were annoyed over the FBR''s values pertaining to Peshawar. The FBR''s efforts were foiled during meeting where Peshawar based property dealers threatened to go on strike. However, the technical experts of FBR and particularly FBR Member IR (Policy) Rehmatullah Wazir played a key role in convincing property and business tycoons to avoid deadlock situation during the ongoing meeting.
Special Assistant to PM on Revenues Haroon Akhtar Khan was confident that both sides would reach consensus on revaluation of property for three major cities on Saturday (July 30) as differences were narrowed down for developing consensus on this issue.
We have agreed that there has to be a middle way and the concerns of the realty sector is justified - if the taxes are raised too much in one go than the market might crash - and nobody including the government does not want to see it, sources said.
FPCCI President Abdul Rauf Alam told media after holding talks that both sides would evolve consensus on lingering controversy. The ABAD''s reprehensive Arif Jeeva also supported his idea that differences would be resolved on Saturday. They said that Special Assistant to PM on Revenues and Chairman FBR would sit together with property dealers to finalise revaluation rates for all cities especially for three major cities of the country.
If both the sides agreed on all issues of property valuation, Finance Minister Ishaq Dar will participate in the negotiations with the real estate sector and may announce the package on Saturday. Arif Jeeva, Senior Vice Chairman Association of Builders and Developers (ABAD) said that the most serious discussions have been over the property rates in Islamabad and Karachi as both cities have witnessed significant rise in property prices but the official minimum rates called the DC rates have not been revised since 2004 in these two places. There is a huge difference between the DC rates and the market rates therefore the tax collection would be significantly lower if levied at the DC rates. But if the taxes are imposed at the current market rates it would be a huge burden on all stakeholders including buyers/sellers and agents, he added.