Impact of Amnesty Scheme on Real Estate Sector
The real estate sector of Pakistan has seen a remarkable interest of investors after the government has announced amnesty scheme with an aim to thrive up the economy. Pakistan has an immense potential for growth through real estate market. Although the conditions for it have never been steady but the recent policing in this sector have caught the glance of many. With the announcement of amnesty scheme and construction sector declared as industry, real estate business has become a game changer. Ergo, the impact is influential as it has paved a way for many who wanted to sync their undeclared money with the governmental accounts. Experts say it has revitalized the industry though the government has designed it to boost up the economy as there are more than 40 industries which are attached with the real estate sector.
To analyze the impact of amnesty scheme let us discuss few of its clauses. The scheme says that withholding tax is removed from all the allied industries excluding cement and steel. Sales tax on services have become zero and now you have to pay fixed tax only, according to the rates decided by the federal and provincial governments. For Example; tax rate for a commercial building in Islamabad is Rs250 Sq/ft whereas that of a residential building up to 3000 square feet will be Rs80 Sq/ft and Rs125 Sq/ft for a residential building that is 3000 square feet or above. This will help to identify and counter corruption in the real estate sector thus generate a positive impact on the business.
If you have purchased a plot or residential building or started a news construction project from April 17 to Dec 31 this year, relief is that, you are out of FBR’s radar of money trail for that investment and tax payment inquiry. But here is a condition, you have to use that piece of land or money wholly in construction projects, the grey structure of which must be completed before Sept 30, 2022. But any kind of activity in the construction industry cannot be conducted on cash payments. Instead, the person has to open up a bank account, deposit the money and do the transactions through crossed cheques.
Official reports say expats send $20bn to $25bn remittances to Pakistan yearly, 50pc of which is invested in real estate sector. People want their investment to generate income. And that’s why many find it interesting to explore the real estate sector. However, lack of proper reforming has kept the government to avail the benefits from this business. Hence, the above discussed reforms have been brought up front to encourage investments and boost up the national exchequer. Luckily, the relief given by the new tax reforms can be enjoyed by lower level investors as well. Those who want to have their dream home built up, the tax relief will act as a savior for them to get out of the affordability crisis.