Disappointed amnesty for realestate
The federal government is out of ideas as one can witness in amnesty scheme in 2016 where it looks like FBR dominate in policy making process though it has failed to check the nerves of real estate market. Prices have decreased around 15 to 20% and there is genuine buyer in the market though investor is a bit hesitant at this stage especially commercial plots.
According to amnesty scheme “W236”, 2016 filler and non-filler has to pay 3% Difference between FBR value and DC rate value though filler can claim these 3 percent when he or she submit their return, question arises why GOVT include filler in this amnesty if one analysis across history of amnesty scheme across the globe at first it is the intention of any GOVT to make the economy documented and increase the tax net but they never include those people who are already in tax net.
Last year GOVT was rest assures by increasing the value of plots they shall get maximum taxes but all went against GOVT interest and revenue collection fallen around 35%. Investors which were mostly overseas Pakistani dis-hoarded and moved to Dubai. As now Dubai has become the signatory of CRS common reporting standard it has become a bit complicated for the investor across the globe to invest blindly. Nonresident in Dubai can be asked about their tax status in their homeland.
According to state bank report in last quarter of previous year a decline in remittance has been witness around the figure of 300$ million (30 billion rupees which is a big reason to worry for an economy where growth rate is around 4.5% it is dire need of GOVT to received remittance and taxes as much as it can. GOVT has to revisit its policies especially for overseas Pakistani and local resident. A big critique on real estate sector is that it’s non-productive and no big contributions towards economy although they forget that there are 36 industries are directly or indirectly linked with real estate except labor force.
Time has come for the GOVT of Pakistan to think out of the box solutions for recovery in real estate sector. A parallel Economy exist in every country on this planet earth and most of the time it is beyond the control of GOVT. Its better be good to encourage the people to come in tax net by giving lucrative amnesty if it keep pushing like this amnesty than not only investor but genuine buyer will disturb.