ISLAMABAD: Finance Minister Ishaq Dar announced on Sunday that the property valuation agreement between the government and the realty sector would be given immediate effect through a presidential ordinance.
Doing this would end a month-long logjam on the registration of property deals and ease the flow of held-up revenue.
Speaking at a press conference, the minister said the landmark deal with realtors would increase the government’s revenue to Rs60 to 70 billion, almost 10 times the amount generated through the Capital Gains Tax (CGT) and withholding tax.
Within 24 hours of striking a deal with land developers and property dealers, Mr Dar announced two major tax exemptions on the transfer of properties for “dependants of martyrs” and parting benefits for “employees in the service of Pakistan”, defined under the Constitution as a one-time benefit.
“There will be no CGT on the first-time sale of properties by dependants of martyrs,” the minister said. Similarly, those in the service of Pakistan, such as the armed forces and the federal and provincial governments, would be charged half the CGT rate as compared to other citizens if they sold the plots given to them in lieu of service benefits, within three years.
Ishaq Dar announces withdrawal of Customs Act from Malakand, Kohistan
Mr Dar justified the promulgation of the ordinance a day ahead of a scheduled National Assembly session on technical grounds, saying the arrangement finalised with realtors could be given legal shape only through a money bill, which required the Senate to have at least 14 days to make its recommendations. This would mean that the process could take a long time to complete, during which the registration of sale and purchase of properties would remain at a standstill, as it had been for the past month.
He said the government did not receive any revenue in July on this account, as negotiations continued with developers and dealers.
He made it clear that the facility would not be available to all defence housing societies, which were originally developed for dependants of martyrs, adding that more than 90 per cent of the transactions in various DHAs were being carried out by the civilians. He said that only the dependants of the martyred servicemen would be exempt from the CGT.
Touting the property pricing agreement as a major achievement of the government, he said it would now hold talks with the provinces to adopt the revised valuation rates for collection of tax at the provincial level on reduced rates. But the law introduced through the presidential ordinance would only cover federal taxes and would have nothing to do with provincial levies such as property tax, he explained.
The minister also announced the promulgation of another ordinance, meant to withdraw the enforcement of the Customs Act, 1969 in seven districts of the Provincially Administered Tribal Area (Pata) of Malakand division and Kohistan district.
He said the Khyber Pakhtunkhwa government had asked for the extension of the act to Pata and Kohistan on May 15 last year.
Mr Dar said he had declined to do so because it was beyond the powers of the finance minister or the Federal Board of Revenue.
Thereafter, the provincial government was asked to move a summary for a presidential ordinance if it wanted the jurisdiction of the Customs Act expanded to Pata.
KP Chief Minister Pervez Khattak then moved the summary and, with the approval of the president on March 28, the act was extended to the Malakand division. However, the people of the area protested against this during a visit by Prime Minister Nawaz Sharif to Swat.
Taking public sentiment and poverty in those areas into account, the provincial government was requested to move a revised summary for the withdrawal of the act from all districts of Malakand.
Mr Dar said the provincial government had moved a fresh summary on May 5 and the prime minister advised the president on July 30 to remove Malakand and Kohistan from the ambit of the Customs Act.