by Real estate sector of Pakistan considered as the multi-million $ industry of country, the biggest sector of job employment and once used to contributes over 2% of total GDP of Pakistan.
Now due to uncertainty in the Real Estate and its reforms, business in this sector fell and due tot he reason Govt got only Rs23 million or less than 0.1% of the size of national economy in the previous fiscal year.
The revenue contribution from property tax should be 1% of the GDP in developing countries. But in reality, real estate tax in developing countries is 0.1% of the GDP and rarely 0.5%. While in the United States, Canada and Australia property tax collected is close to 2% of the GDP on average.
The real estate sector is the second-largest sector of job provider and also stimulates the growth of industries like cement, steel and other building material.
Though FBR failed to curb tax evasion from big & small housing societies, builders and developers but Govt policies effected investors the most. However, the government can increase the tax revenue obtained from the real estate sector in order to meet its revenue target by reducing the period of gains tax on purchase of property should be seven years rather than five, secondly, the tax rate should be decreased from 2% to 1% for filers and from 4% to 3% for non-filers. Due to this step, the burden of taxpayers will be reduced but the time for paying the taxes would be increased, so people will be able to pay taxes easily.
Govt should focus tax collection in transparent manner from housing schemes, their owners, real estate brokers and investors but side by side promote investors to invest in the sector as everyone is not able to invest in other businesses. In the developed countries, real estate sector is always one of the major source of investment, so Pakistan should also promote this industry, which is good sources of increasing forex. Hope, that after establishing RERA (Real Estate Regulatory Authority), Govt will minimize tax burden on real estate investors so that there would be more transactions and so more tax generation.
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