KARACHI: The purpose behind revised property valuations is to bring black money into the mainstream economy as around Rs6-7 trillion are currently invested in the construction and real estate sectors, Federal Board of Revenue (FBR) Member Inland Revenue Policy Rehmatullah Khan Wazir said.
He said this during a meeting with the Association of Builders and Developers of Pakistan (ABAD) members. “The FBR knows that this huge amount cannot be brought in the tax net immediately with the stroke of a pen – it will take time,” said Wazir. “However, a process had to be initiated at some point so that this money could be incorporated into the national economy,” he added.
Wazir said that the FBR is ready to bring valuation at par with the actual market prices wherever anomalies are found in the rates notified by it.
He also announced that the FBR will take ABAD on-board regarding the federal budget.
The member FBR said that a fixed tax for construction sector was proposed by ABAD that could not be changed or set aside. However, he said that if ABAD could take opposition parties into confidence, the National Assembly can change the law.
“I will again advise ABAD to take all opposition parties into confidence regarding the amnesty,” he said, adding that the opposition parties are against money-whitening schemes.
Wazir discarded the impression that there is confusion regarding property valuations and said that only rates of Capital Gains Tax (CGT) have been increased. The registrar can charge CGT according to table provided by the FBR, the official added.
Earlier, addressing the meeting, ABAD Acting Chairman Arif Yousuf Jeewa assured FBR that the builders and developers will pay more taxes – pushing the collections to Rs25 billion.
He urged the government to clarify the policy regarding property valuations so that builders and developers can move on with their schemes. He said the construction sector is playing an important role in the national economy. “We will support the government in the China Pakistan Economic Corridor (CPEC) as this project will augur well for Pakistan’s economy,” he added.
ABAD Patron-in-Chief Mohsin Sheikhani said that the construction market has nosedived during the last three months owing to the government’s latest measure. This has also led to the stagnation of property registration. He said the FBR and the government should clear up the confusion.
Addressing the meeting, ABAD Chairman Southern Region Asif Sumsum said after 2013, Karachi’s construction business bounced back in the last two-and-a-half years, but the confusion in property valuation has again put breaks on this sector.