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Introducing Fair Market rates real win for the Government,

(104455)
Sunday, July 31, 2016 08:18 PM 

I think the government played its hand cleverly and used the age old tactics of inserting some clauses that it planned to withdraw in the first place i.e. like state bank evaluators, high CG rates at smaller year duration, etc. In return, they fooled their counterparts by introducing notification of fair market rates by FBR !!!! This is their real win. They will determine the market price for federal taxation rather than rely on dc rate which could not be increased too much since provincial governments need to acquire land from public at these rates. We all know FBR is more corrupt than state bank itself. So what is the advantage gained by real estate negotiators in this? I fail to understand.
Percentage could be small this year, but they will keep increasing the percentage in the later years. This is what this government does best. The real estate negotiators should have outrightly rejected any market price determination by FBR and stood their ground on using dc rate as the basis for all calculations.

User_6006® replied on Sunday, July 31, 2016 08:18 PM 

As a new comer and student into property trends i can clearly tell you what is going on and near future ,
Govt clearly made up mind to distribute public investment into other sectors like small business , commodities , saving schemes , bonds .
Current taxes settlement will add further backward pressure on market , because it's still high taxes , govt tricked us by imposing so high and than minimising it to what they have real in mind
Property works on it's cycle , with 2011 recovery to 2016 boom , market is going into slump natural phase , no matter of how much govt investing in lahore , in slump phase plot remain of same value even given possession
With less buyer in future nothing good i can see , beside govt should strengthen this sector to survive slump acted against it
Agents/dealer trying their best to keep moving things but they will and public taste repeating history from .

User_6006® replied on Sunday, July 31, 2016 08:37 PM 

Govt complicated things a lot , so many bad news about it on media , over discussion etc ,only resulted into loss of trust into property sector , govt in haste and greed of more taxes or in try of moving people towards other flop sectors successfully shake trust of people from property , it will hurt investor a lot , till next elections property market will see genuine buyers only , investor already started moving abroad , or in other sectors . welcome bad phase , more seller hold more he loose now

doctor replied on Sunday, July 31, 2016 09:20 PM 

I fully agree with you ;

they made every one fool here. their whole idea was to enforce FMV and inc DC rate to get more taxes and inc limit of CGT to 3 year holding !!!

real estate dealers/ stake holders were absolutely made fool

SIM replied on Monday, August 1, 2016 02:23 AM 

In my opinion 4% advance tax on fair market value will be the biggest problem. If you buy a commercial plot worth 10 crores, you will have to pay 40 lacs as advance tax only. Which previously was negligible on DC rates.
Karachi dealers have already rejected the deal and announced protests. I think big win for Govt.

HassanHC® replied on Monday, August 1, 2016 02:31 AM 

Lahore dealers have accepted as here DC rate was not hugely different. Sir Jee it's refundable when you file taxes. Plus will be adjusted against any other tax due. Also non filer if files tax can get it back. All in all go to zameen forums most of the dealers are looking confident and relieved.

HassanHC® replied on Monday, August 1, 2016 02:31 AM 

Lahore dealers have accepted as here DC rate was not hugely different. Sir Jee it's refundable when you file taxes. Plus will be adjusted against any other tax due. Also non filer if files tax can get it back. All in all go to zameen forums most of the dealers are looking confident and relieved.

Szaidi® replied on Monday, August 1, 2016 04:17 AM 

It is a good win for Govt. Beside increasing tax rates they have taken power to decide market rates every year. So now every year market rates will be increased. Also power to decide market rate will be in the hand of FBR instead of SBP. SBP would be much fair as compared to FBR. Now FBR will use tactics of increasing market rate every year for some higher value and after protest of dealers and people they will give discount of few percent. So it will be win-win situation for Govt. But in spite of all overseas Pakistanis has no other choice but to invest in property. So growth will still be seen in property market.

Tahir Islam Bokhari replied on Monday, August 1, 2016 06:37 AM 

Dear Friends, the Govt. can only win if the investors will also win, otherwise the Govt. will be a bigger looser as it has already been proved in the last one month when several times less tax has been collected compared to previous months.

But I think that the confusion among people is a bigger issue than the taxes . Its actually a winning situation for the investors also under the current scenario.

Fair Market Value is better for you as a tax payer rather than current DC Rates. You would not pay any Gain Tax if you buy and sell s property in the same financial year as Fair Market Value will remain the same. Gain Tax is imposed on the difference between Purchase and Sale Prices.

But if you wish to maintain DC Rates, then more of your white money will become black as you would be posing to buy and sell your property at (less) DC Rates rather than Fair Market Rate.

The real issue is not the New Tax Rates, as they would not make much difference as compared to Previous Tax Rates. But the real issue is the confusion among investors regarding additional amount of tax they would have to pay in a single property transaction.

Fortunately, the new agreement with Govt. has cleared the dust, and the situation remained almost the same with just a little more taxes.

But unfortunately, due to ill informed discussions by some of the members is maintaining and creating further confusion. I would request my friends to avoid adding confusion based on assumptions and unfounded apprehensions.
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