Islamabad – The real estate sector has urged the National Assembly Standing Committee on Finance and Revenue to amend “The Tax Laws (Amendment) Bill, 2024” to allow property transactions of up to Rs 50 million without requiring buyers to disclose their source of income.
The proposed legislation, which is still awaiting approval by the National Assembly, currently mandates that no individual can purchase property worth more than 130 per cent of the liquid assets declared in their previous tax returns. If the property value exceeds this threshold, the buyer must first justify the source of investment.
However, key stakeholders in the real estate sector argue that this provision could stifle investment in real estate and drive capital out of the country. They propose an exemption for transactions up to Rs 50 million, at least for one year, to stimulate growth in the property market and attract greater formal registrations.
A sub-committee of the National Assembly Standing Committee on Finance, chaired by Bilal Azhar Kayani, has been set up to deliberate on an appropriate exemption threshold. The committee was scheduled to meet on Friday at the Federal Board of Revenue (FBR) Headquarters, but the meeting was postponed due to the unavailability of the FBR chairman and a meeting room on the third floor. Instead, the meeting will be held next week.
Prominent real estate figures, including Arif Habib, chairman of Arif Habib Dolmen REIT Management Limited (AHDRML), and representatives of the Association of Builders and Developers of Pakistan (ABAD), participated in discussions virtually. During a previous meeting, Dr. Najeeb Memon, FBR’s Member Policy, mentioned that the board was considering allowing property purchases of up to Rs 10 million without income source disclosure but had yet to finalize the decision.
Real estate experts have expressed concerns that the bill, if enacted without modifications, would have adverse effects on the sector. They argue that real estate plays a vital role in the national economy and contributes significantly to tax revenues. The sector is already subject to high taxation, estimated at around 115 per cent, and further regulatory constraints could dampen investment.
Moreover, real estate representatives warn that stringent tax policies could lead to capital flight, with investors diverting funds to foreign markets such as Dubai. They suggest that tax authorities should verify filer information at the time of property registration rather than imposing preemptive restrictions that could hinder transactions.
The real estate sector has called on the government to introduce measures that incentivize corporate developers and promote growth in the formal property market. The representatives of ABAD have also put forward recommendations to the sub-committee, emphasizing the need for policies that facilitate rather than hinder real estate investments.
With deliberations ongoing, the sector remains hopeful that the government will adopt a balanced approach to taxation and regulation, ensuring continued investment and development in Pakistan’s real estate market.