LAHORE - The real estate sector is providing jobs to millions of people while giving business to dozens of allied industries. Therefore, timely action must be taken to redress grievances of builders and developers, as crisis of real estate sector is also hitting more than 50 affiliated industries hard.

DHA Real Estate Agents Association chairman Major (r) Rafique Hasrat urged the government to save the real estate sector that is on the verge of collapse because of heavy taxation and strict regulations.

While talking to The Nation, he appealed to Finance Minister Ishaq Dar and Punjab Chief Minister Shehbaz Sharif to take immediate notice of the situation.

“The government has failed to collect the revenue through heavy taxation on this sector. He suggested the authorities to increase tax gradually, proposing tax amnesty on the patron of stock market investors.

Rafique said that government should be well aware of the fact that heavy taxation on the real estate is not doing any service to the national economy as property prices are still on the rising side, job opportunities are reducing and capital flight is being witnessed. Almost 90 percent of real estate business has collapsed due to double valuation, raising tax by 100 per cent along with new valuation, and harassment of real estate agents and new buyers by the Federal Board of Revenue during last six months. Remaining 10 percent business is also feared to close down if government does not take cognizance of this issue, he added.

The chairman said the DC property valuation system was implemented countrywide since 1986 and was acceptable to all stakeholders. “In new ordinance, withholding advance income tax and withholding capital gain tax was increased by 100 percent which resulted in closure of 90 percent real estate business in the country.”

Owing to this situation, this business is being moved to Dubai, Malaysia and other countries. There is also a tremendous decline in bank transactions, he lamented. While elaborating the point, he said that an average transaction in real estate sector of the country adds approximately one per cent to the price of property. He said that after levying huge taxes and imposition of new rules, the same transaction will add approximately two per cent to the value of property. It means that despite slow down in the real estate sector, the prices of property will continue to rise.

He suggested that real estate sector should be declared as an industry that would help it play decisive role in promotion of economic activities.

Federation of Pakistan Chambers of Commerce and Industry president Abdul Rauf Alam said government is aware of the importance of the vibrant construction sector and the issues of builders and developers would be resolved soon.

The apex chamber is in contact with the authorities to get the problems resolved as soon as possible, said President FPCCI. Abdul Rauf Alam said that FPCCI continues to apprise the government of problems faced by builders and developers, especially the issue of property valuation.

Federal Board of Revenue chairman Nisar Muhammad Khan has made it clear that there was no amnesty scheme under consideration for the real estate sector.

He said the tax authorities were not in agreement to suggestion of National Assembly Standing Committee on Finance of giving one time exemption or imposing a fix tax on the difference amount and are not introducing any amnesty scheme. Khan added that the FBR had no powers to introduce tax amnesty scheme.