A joint meeting of finance committees of the both the houses -Senate and National Assembly -will propose a legislation to the next session of Parliament for giving a one-time amnesty scheme to real estate sector. This was disclosed to a group of media persons by Mian Abdul Mannan - part of a three-member sub-committee of finance, dealing with the matter and ruling party legislator in the National Assembly who has been involved in backdoor discussions between real estate sector and Federal Board of Revenue (FBR) since promulgation of Ordinance to resolve the issue of taxes and enhancement of fee on real estate transactions.
"Parliamentarians have firmed up proposal to grant a one-time tax amnesty for money whitening invested in this sector under which a 3 percent tax will be charged between declared value of DC rates and price tables notified by the FBR. The new legislation bill will be tabled in the upcoming session of Parliament," he further disclosed.
"We want to save the sector; we've therefore decided to give a one-time amnesty to it," he said, adding "a joint meting of National Assembly's Standing Committee on Finance and Senate Standing Committee on Finance will propose a legislation for the next session of the Parliament for a one-time amnesty." He was optimistic that the matter would be resolved in one month and time period of amnesty would be two to three months.
He hoped that the proposed amnesty would facilitate transactions for a few months period so that all those people could sell their plots who had purchased before effectiveness of new valuations of properties notified by the FBR. Earlier, during a meeting of a sub-committee convened to make recommendations with the consent of stakeholders for resolving the issue on imposition of tax and enhancement of fee on real estate transactions, he added that there are considerable anomalies in the rates fixed by the FBR for 21 cities.
According to him, not all the money invested in the real estate sector is black money. He claimed that half of the total $18 billion remittances go to real estate sector. This amount, he maintained is legitimate because it is remitted to Pakistan through legal channels.
Mannan further stated that FBR and DCO offices should devise a strategy by involving committee members to do away with anomalies of rates in various areas. As far as 'Benami properties' are concerned, the matter has landed in the Supreme Court in the form of the Panama Leaks and the court's decision is likely to encompass all such transactions. If the court gave any decision on Benami transactions in a month of two, then no one would do anything, he added.
He said there is a need to introduce a one-time amnesty scheme for real estate sector as well, like the one introduced in the case of stock exchange. He said the proposed scheme would give billions of rupees of revenue to the government but declared properties would also be a source of income in the future. "90 percent of demands received by the committee were for a one-time amnesty scheme," he said.
He informed the committee that the government agreed to constitute an anomaly committee within next few days with a mandate to recommend rationalisation if something unusual was notified by the FBR in valuation tables of different cities. He cited the example of Faisalabad and said that the DC rate for Canal Road was jacked up to Rs 5 million against the much lower market price.
Some representatives of real estate sector blamed the government for the problem because it had not addressed the DC rate, which was a major source of dispute. They said the government's recent measures were a great setback for the foreign investment in the sector and suggested these measures must be for over Rs 6 million transactions. The representatives of real estate argued before the committee that there was a need to introduce amnesty on pattern of stock market where a fixed tax should be introduced to whiten the black money by bringing it into the tax net. Rasheed Godial of MQM Pakistan said there was a need to find out an amicable solution as no poor man could afford to buy a five-marla house in any housing society.