Business

Real estate taxes to hinder growth of construction sector

Businessmen demand restoration of incentives, review of proposed levies

Our Correspondent June 12, 2022

Real estate agents, jewellers and accountants will maintain record in the paper or electronic form or on microfilm. PHOTO: FILE

ISLAMABAD:

The new taxes imposed by the government through the budget for 2022-23 on the real estate sector will badly affect the growth of construction industry and largely increase unemployment, said Islamabad Chamber of Commerce and Industry (ICCI) President Muhammad Shakeel Munir.

“The construction industry plays a vital role in the development of the economy, as better growth of this industry promotes businesses of over 50 allied industries,” he said, according to a statement released on Saturday.

Munir asked the government to review the taxes imposed on the real estate sector and restore the old incentives.

He pointed out that the government in the new budget had proposed that the owners of more than one immovable property of above Rs25 million value in Pakistan shall be deemed to have received the rent equal to 5% of the fair market value of the immovable property and shall pay tax at the rate of 1% of the fair market value.

He said that the government had also imposed 15% tax on the capital gains of immovable property in the case of one-year holding period, “which is very high”.

Furthermore, the advance tax on sale/ purchase of property for the tax return filers has been increased from 1% to 2%.

“All these tax measures will badly affect business activities in the entire real estate sector and create more unemployment,” remarked Munir.

He suggested that the government should increase taxes on the non-filers of tax returns, but it should avoid imposing more taxes on the filers.

The ICCI president also pointed out that 2% tax had been imposed on all those individuals, including companies and the Association of Persons (AOPs), with annual income of Rs300 million or more.

“This tax should be reconsidered to save the business community from the burden of unnecessary taxes.”

In the new budget, agriculture and agro-industries have been exempted from customs duty, but other industries have been ignored.

Published in The Express Tribune, June 12^th, 2022.

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