The business community has rejected the draft amendments to Income Tax Rules 2002, binding the real estate agents and jewellers to maintain record and report about suspicious transactions to the FBR, saying the gold and real estate businesses, which have already been nearly paralyzed, will be collapsed completely.
Friends of Economic and Business Reforms (FEBR) President Kashif Anwar criticized the FBR's new SRO 1320 (1) 2019, as it threatens the real estate agents and jewellers of cancelling their licence, penalty as well as prosecution for failing to implement the new directives.
According to the FBR's SRO 1320 (1) 2019, issued for draft amendments to the Income Tax Rules, 2002, the record to be maintained by the real estate agents and jewellers under new rules can be inspected by tax authorities along with other law enforcement agencies. Where the record is not maintained in the prescribed form, their business license shall be suspended, besides they may face penalty and prosecution.
The FEBR president said real estate sector is the largest employment generator after agriculture and if this industry slowed down, millions associated with the sector would be affected.
He said that the FBR's move is likely to further depress the property market as well as the jewellers business that have seen a severe cut in the transactions after previous decision of enhancing properties' value and record jump in gold rates especially due to huge depreciation in rupee versus dollar.
The current measure would create more problems for the businessmen, he added. He said the volume of business activity is next to zero as the investors are driven out while a mismatch of demand and supply keeps the deals from materializing. He said it was unjust for the FBR to take such a measure without consulting the stakeholders.
"The upward revision in the property values has already hurt the industry a lot. FBR should have consulted the stakeholders before taking any measure to avoid creating any market uncertainty."
Kashif Anwar said that real estate market is the backbone of its economy, with as many as 250 different industries depending upon it. These industries are mostly connected to the construction of real estate projects and include cement, building, timber, steel, sanitary fittings and a range of other businesses. Furthermore, the industry is worth more than $700 billion.
In order to comply with the Financial Action Task Force (FATF) requirements, the FBR issued draft amendments to Income Tax Rules 2002 for ensuring documentation of real estate agents and jewellers, he added. He said that the FEBR is not against documentation but the drive to document different sectors of the economy should not be so severe that it destroys the whole businesses.
"The businessmen fully support the government's efforts of controlling money-laundering and checking terror financing but a fair and reasonable way should be adopted in consultation with the stakeholders to tackle these menaces so that the economy could not be hurt and run smoothly," he suggested.
Copyright Business Recorder, 2019