The National Assembly's Standing Committee on Finance has approved a law to grant one-time amnesty scheme for real estate sector amid opposition to the scheme by the Finance Ministry and the Federal Board of Revenue (FBR).
A meeting of the Finance Committee chaired by Qaiser Ahmad Sheikh approved recommendations of the sub-committee that "FBR may charge 3 percent additional tax to the extent of amount they (people renegade real estate transactions) are unable to reconcile in their wealth statement and amnesty scheme must be only available for the people engaged in the real estate transactions. The areas where valuation has been done on higher side by the FBR may be rectified immediately with the consent of stakeholders."
The sub-committee also recommended that the "federal government may charge 1 percent in total for withholding tax, advance tax from both buyers and sellers and capital gain tax. Prevailing federal government taxes charged by the FBR on property transaction was approximately 3 percent to 6 percent and capital gain tax on FBR value or 1 percent of fair market value whichever is higher. This one percent will be inclusive of all advance/adjustable federal government taxes including capital gain tax."
Parliamentary Secretary Finance Rana Muhammad Afzal said he was not in agreement with the sub-committee's recommendations to give one-time amnesty to the real estate sector because this would lead to whitening of huge amount. "We need to tighten this law against black money instead of opening new door of converting black money into white."
He said the government would be ready to take one percent from Association of Builder and Developers (ABAD) if they are ready to get valuation of their properties done from the State Bank of Pakistan (SBP). He also disagreed to the ABAD's claim that there are 72 industries linked with real estate sector and maintained that consumption of cement and other items has not shown any decrease during the last few months.
Chairman FBR Nisar Muhammad Khan said, "We have different viewpoint on the scheme, which will be presented to the government on each recommendation suggested by the sub-committee and approved by the main finance committee to grant one-time tax amnesty to the differential amount or the amount which can not be reconciled with their wealth statement." He added, "We are trying to get closer to the fair market value."
Abdul Rashid Godil said the government will have to give first time amnesty; otherwise, the investors would transfer their investment in Dubai. The committee also suggested a reasonable reduction in the interest rate of Zarai Taraqqiati Bank Limited after members complained that ZTBL was charging interest rate on farm loans comparable to the commercial banks. The committee members stated that ZTBL presentation was very sketchy and does not include vision for promotion of agriculture growth.