The real estate association still protests against the new capital gains tax regime
As the last day of budget discussions draws to a close, the real estate associations led by the Association of Real Estate Advisors (RECA) continue to protest because their demands concerning the amendment of article 37 of the 2021 finance law. 22 seem to have fallen. in deaf ears.
Despite strong awareness campaigns by RECA and other real estate associations, it is not clear whether the government will go ahead with the new tax changes proposed by FBR or continue with the capital gains tax regime. From previous exercises.
Under the current tax regime (2020-21) Capital gains, in the first year, less than Rs. 5 million are taxed at 2.5%, above Rs. 5 million but less than Rs. 10 million are taxed at 5%, above Rs. 10 million but below Rs. 15 million are taxed at 7.5% and above 15 million are taxed at 10%.
RECA representatives say increasing taxes levied on the sector is a no-problem. And if the government wants to derive more income from capital gains, it should increase the ratio of fixed taxes. The real problem of the association concerns the FBR’s proposal to modify article 37 of the 2021-22 finance bill to integrate the capital gains tax into the personal income tax. . If this happens, any cumulative capital gain greater than Rs. 6 million will then be taxed at 35% under the highest income tax bracket.
The association claims that under international financial standards, capital gains, being gains on assets, are always taxed separately on the sale of particular assets as an individual item and are not added to regular income.
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RECA ran several advertisements on key national TV stations like Dunya, Geo, ARY, Hum, 92 News and others to educate the mass population and get its message across.
In a video message, RECA General Secretary Muhammad Ahsan Malik explains that real estate contributes significantly to Pakistan’s economy, and how ignoring it would have serious consequences for Pakistan’s economy and people. He adds that the increase in foreign remittances over the past year can be attributed to the growth of the country’s real estate sector.
He argues that if the government does not grant concessions to the Pakistani state sector, the government’s efforts to revive and induce growth in Pakistan’s construction industry will be in vain.
Mr. Malik reaffirmed the argument of all real estate associations that ânowhere else in the world is tax levied in such a way thatâ other income tax âis associated withâ income tax â. real estate gains “of an individual”.
The secretary general of RECA reiterated that his association and other real estate associations nationwide had already sent suggestions to relevant departments, and that they should be considered and implemented in the next budget for fiscal year 2021. -2022.
These associations also believe that if the newly proposed changes in Section 37 are finalized and implemented, Pakistan’s housing sector will be severely affected.
This in turn would disrupt the continued growth of the real estate industry and impact buyers as new taxes would be imposed. In addition, people who try to build their own house would be discouraged from doing so, as the cost of building a house would increase.
This will have an impact on inbound remittances as it appears that a huge amount of non-resident Pakistanis are investing in Pakistan’s real estate sector.
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Although all stakeholders are hopeful that the government and the authorities responsible for reviewing the budget bill have shown sympathy towards the real estate sector in Pakistan, but the lack of clarity worries people as budget discussions are expected to end. close today and the revised 2021-22 budget bill is expected to be presented to parliament for a vote tomorrow.