Tax Amnesty Package 2018 – Is it a Nightmare for Real Estate Industry?

Federal Government of Pakistan has announced a tax amnesty scheme just before the end of their tenure in 2018. The basic purpose of this amnesty scheme was to overhaul the taxation system and increase the tax net. In our current discussion, we will consider the impact of this scheme on real estate sector.

First of all, we need to discuss some major points of tax package 2018 and here they are:

  • CNIC number will become the NTN number to bring all citizens of Pakistan under tax net.

  • The complete tax exemption will be available to those citizens who have income up to PKR 1.2 million.

  • If a citizen has an income of above PKR 4.8 million, the maximum percentage of tax will be 15 percent.
  • You can declare all those assets, which have not declared yet through this scheme. You need to pay a nominal amount against it.

  • This exemption will only for one time.
  • Tax rate on all properties will be uniform in which 1% tax will be federal tax and 1% will be provincial tax.

  • Government has a right to purchase any property within six months by paying 100 percent and above over its declared value.

  • Government has all rights to monitor citizens’ financial records and take necessary actions if find any ambiguity.

Overall, it is a good package and the government has been taking this bold step to attract more and more citizens to register themselves as a tax payer and increase the revenue of the country. But, in this discussion, we will also study the impact of this package on real estate sector and property consultants in Lahore and other major cities of Pakistan.

Let’s discuss some long term and short term effects of Tax Amnesty Scheme 2018 for real estate sector in Pakistan.

Short term Effects

  • Many people will take interest in this package and if it happens, the government will be able to raise billions of rupees.

  • The declared money will not be invested in real estate sector, but people, who do not want to declare some of their amount, will come in real estate sector and give a boost to it.

  • People, who are scared of this scheme, will also try to invest in real estate sector.

  • As the overall market is low at the moment, so we cannot expect a high boom in real estate sector as only a few millions will come in this sector.

Long Term Effects

  • In long term, these tax reforms will help to flourish real estate sector in Pakistan and it will grow steadily and smoothly. Through this tax amnesty scheme, if it is implemented successfully, the government will simplify the processes and remove all complications related to tax reforms.

  • Everyone will become a filer and taxpayer as CNIC will be the NTN as well.

  • If there are few people who still want to fall in non-filers category, they can invest in those properties, which are below Rs. 4 million. We, at Lion HDB, assure you that there are numerous such properties and you have the opportunity to invest in small societies. It means that we can expect a boom in small societies where prices are still affordable.

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