Withdrawal of ban on non-filers augurs well for real estate sector
Industry officials welcome move which will attract investment
Industry officials welcome move which will attract investment. PHOTO: FILE
KARACHI:
The real estate sector had been struggling due to the government's condition that had prohibited non-filers of income tax returns from buying property valued above Rs5 million, However, now, with the ban withdrawn, the sector is expected to flourish again and attract foreign exchange from expatriates.
On Tuesday, the government removed the ban, announced by former finance minister Miftah Ismail in April, earlier this year, which was applicable from July 1, 2018. Reacting to the decision, Ismail expressed his displeasure on Twitter and accused the incumbent government of falling to the pressure of auto companies and land developers.
Booming real estate sector contributes just Rs23 billion in taxes
The government has decided against the ban because Pakistani nationals living abroad have complained that the ban has prevented them from buying property in Pakistan. The expatriates are not obligated to pay tax in Pakistan as it would double their tax incidence and they already pay tax in the country they are working in.
According to Pakistan Real Estate Investment Forum President Shaban Elahi, Pakistan receives around 40% to 50% of total remittances in the real estate sector.
"According to the government's own estimates, Pakistan received around $8-10 billion of total remittances of $20 billion in property and real estate sector from overseas Pakistanis," he said. Association of Builders and Developers (ABAD) Chairman Arif Jeewa said that according to his assessment based on his discussion with ABAD members, 20-25% of property buyers are overseas Pakistanis, who either directly buy from abroad or buy through friends and relatives.
Real estate business adjusts after new regulations
"We are hoping the business would pick up speed again with the government reconsidering its decision on nontax filers. The investment from overseas Pakistanis had almost stopped in the sector," Jeewa told The Express Tribune. The sector struggled due to the ban, which affected local buyers as well, eventually leading the sector to a slowdown, he added.
The real estate sector had been struggling due to the government's condition that had prohibited non-filers of income tax returns from buying property valued above Rs5 million, However, now, with the ban withdrawn, the sector is expected to flourish again and attract foreign exchange from expatriates.
On Tuesday, the government removed the ban, announced by former finance minister Miftah Ismail in April, earlier this year, which was applicable from July 1, 2018. Reacting to the decision, Ismail expressed his displeasure on Twitter and accused the incumbent government of falling to the pressure of auto companies and land developers.
Booming real estate sector contributes just Rs23 billion in taxes
The government has decided against the ban because Pakistani nationals living abroad have complained that the ban has prevented them from buying property in Pakistan. The expatriates are not obligated to pay tax in Pakistan as it would double their tax incidence and they already pay tax in the country they are working in.
According to Pakistan Real Estate Investment Forum President Shaban Elahi, Pakistan receives around 40% to 50% of total remittances in the real estate sector.
"According to the government's own estimates, Pakistan received around $8-10 billion of total remittances of $20 billion in property and real estate sector from overseas Pakistanis," he said. Association of Builders and Developers (ABAD) Chairman Arif Jeewa said that according to his assessment based on his discussion with ABAD members, 20-25% of property buyers are overseas Pakistanis, who either directly buy from abroad or buy through friends and relatives.
Real estate business adjusts after new regulations
"We are hoping the business would pick up speed again with the government reconsidering its decision on nontax filers. The investment from overseas Pakistanis had almost stopped in the sector," Jeewa told The Express Tribune. The sector struggled due to the ban, which affected local buyers as well, eventually leading the sector to a slowdown, he added.