ISLAMABAD: Task Force for development of housing sector has recommended abolition of section 7E of the Income Tax Ordinance, capital value tax (CVT) in Islamabad and reduction in transaction taxes on buying/selling of immovable properties.
Sources told Business Recorder that the Task Force for development of housing sector has finalized its short-term, medium-term and long-term recommendations for the Prime Minister.
A senior FBR official informed that there is no possibility of any amnesty scheme or exemption for the real estate sector.
Investments in real estate: Overseas Pakistanis now eligible for exemption from higher tax rates
However, if the 12-13 percent transaction taxes are not being reduced on real estate sector, the investment would be diverted abroad. After increase in taxes rates, the property transactions have been reduced below 50 percent or transactions are taking place under “power of attorney”.
The increase in taxes on buying and selling of immovable properties has restricted transactions in the real estate sector. Federation and provinces should collectively work to reduce transaction taxes on real estate sector in coming budget.
It is a fact that people are reluctant to invest in stock market and prefer their investment in real estate sector. The construction sector would be facilitated in the next federal budget to encourage investment, officials added.
According to the final recommendations of the Task Force, it has recommended waiver of sub section 2A of 236C pertaining to 7E declaration & approval by Commissioner, provide basic exemptions for properties valued at up to Rs 10 million, shifting non-resident verification to an online system via NADRA and uniform rate for filers and late filers to remove disparities.
Task Force has further recommended abolishing section 7 E of the Income Tax Ordinance; standardizing and rationalizing stamp tax rates across provinces and ICT, abolishing CVT in Islamabad and ensuring uniform taxation policies through the National Tax Council and waiver of wealth reconciliation for investment in real estate and construction sector up to Rs. 50 million.
Task Force has further recommended revision of property valuations every three years to reflect market prices and introduction of exemptions for transaction tax for specific categories, such as low-cost housing, government plots, and first-time homebuyers.
The short-term recommendations of the Task Force also included reduction in Policy Rate to single digit; resuming the MPMG Scheme to restore developer confidence; reintroducing mark-up subsidies for low-cost housing loan; launching awareness campaigns and financial literacy programs to educate consumers; collaborating with real estate developers to offer mortgage financing options and implementing low /fixed-term loans for periods like 5, 10, and 20 years.
The short-term recommendations of the Task Force also cover ensuring all building and housing scheme approvals are online and time bound, introducing policies for vertical growth through tax incentives, green building initiatives, and solarization, relaxing building regulations & floor area ratios (FAR) to facilitate vertical development, establishing High Density Zones for residential buildings with G plus 2 & 3 permissions, growth framework for Housing sector and introduction of Zone compliance system to replace traditional NOCs, housing for low- and middle-income groups to be defined in monetary terms, ranging between Rs 50,000 to Rs 200,000, for targeted implementation, participation of private sector through PPP & joint Venture modes for low cost and affordable housing.
Copyright Business Recorder, 2025
Comments