Lahore Real Estate Forum: Property News & Community Talk : ,

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There is a proposal to put 10% tax on sale / purchase of all plots over 259 sq. yards. I think this will discourage real estate trading, forcing investors to look for alternatives and resulting in prices to come down. Let's have perspective from the forum. Business Recorder news story follows.

ISLAMABAD: The National Assembly’s Standing Committee on Finance has proposed a range of taxation measures for documentation of the economy and asked the government to impose 10 percent tax on all the property transactions of 259 square yards and develop a data bank of all bank accounts with more than one million to track the wealth of non taxpayers.

Sources told Business Recorder that Chairperson of Standing Committee, Fauzia Wahab handed over a written document to the officials of Finance Ministry on Friday. The language of the letter suggests that the parliamentarians are dissatisfies and displeased over the performance of the economic team especially the Federal Board of Revenue (FBR).

The committee strongly recommended structural changes in the FBR to make it proactive, dynamic and motivated to bring undocumented sectors into the tax net. The committee said that one of the biggest problems of the country was that many segments of the economy remains undocumented largely because of tax machinery’s lack of initiative or drive to bring the rich people into the tax net.

The tax proposal recommended by the committee included bringing agricultural sector into the tax net as well as registration of the market commission agents involved in trade of agricultural goods, initially at market committee level with a fix tax rate in proportion to their income. The copy of the letter exclusively available with Business Recorder stated that the committee had received a number of complaints about section 8A of the Sales tax Act.

The committee recommended that the trend of burdening those already paying taxes should be stopped and tax collectors required to be given the target of locating those who live a lavish lifestyle but are non-existent in the tax payers list. The tax authorities suggested that a strong data bank should be developed on all financial transactions, such as all bank accounts with more than Rs.1 million, sales and purchase of motor vehicles.

The committee wants to know about the buyers of 0.3 million vehicles, which are said to be manufactured annually and whether buyers of these vehicles are part of the tax net or not. A close and an institutional understanding between the Federal Board of Revenue (FBR) and National Database and Registration Authority (NADRA) was underlined to use the ID card number as tracking instrument to assess the person’s financial strength.

The Standing Committee suggested to the government that another segment that is lying out of the purview of tax department is the sale and purchase of property. “We see immense activity in the sector, with heavy investment, yet the state has no real income. The committee proposed that any property transaction within a period of two years should be taxed at the federal level at the rate of 10 percent of the profit in the sales and purchase of property measuring 259 square yards.

The National Assembly’s body on Finance also proposed that an incentive package should be given to honest taxpayers to give them feeling of importance and recognition. The committee requested the government to give a national pride card to them and a separate counter should established to give them preferential treatment in issuing passports, NIC card and other facilitation so as to give message that how honourable it is to pay taxes.