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After shocks of property tax amnesty scheme

After shocks of property tax amnesty scheme
Tax amnesty scheme for real estate sector approved

National Assembly has finally approved a tax amnesty scheme for real estate sector on Wednesday, 30-11-2016. According to this property amnesty scheme, people have to pay 3% tax on the difference between the old DC rate and new FBR rates to whiten the black money. Another important point of amnesty scheme is that there is no time limit or duration of this amnesty scheme. So people with black money can whiten it anytime by paying just 3% tax.

Effects of real estate amnesty scheme

Destruction of tax structure in Pakistan

In Pakistan individuals have to pay maximum of 35% taxes on their earnings. But on late payment, penalty is 100%. So tax payers in Pakistan pay 35% taxes on their income and their net saving after taxation is just 65%. On the other hand, investors in reality sector will have to pay just 3% and 97% amount will be declared as white money. This will totally destroy the tax structure in Pakistan.

Now real estate sector has legal license to whiten black money

Real estate sector is generally considered as the best sector to whiten the black money. But now people with black money will invest in real estate sector for just one purpose, to whiten their capital by paying just 3% taxes. Now onward, real estate sector will be used as sure way to whiten the black money.

Unaffordable property prices in future

Property prices are unaffordable for majority of Pakistanis. This is just because of black money in real estate sector. Prices were declining, but now property prices will be sky-high once again. Prices will double within short span of time. But unfortunately wages have never increased by same ratio. So in long run, house affordability will decrease and there will be more renters than home buyers in Pakistan.

Winners and losers of real estate amnesty scheme

Realtors, investors and people with black money are at advantage

Property transactions were 80% down since 1 July 2016 due to new tax laws. But now we will see increase in property transactions. This will definitely increase the income of real estate agents. Investors will get good returns on investments due to coming storm of black money investments in reality sector. People with black money will be biggest winners as they can whiten their money by paying just 3% tax.

Tax payers and genuine buyers are at disadvantage

Tax payers and genuine buyers are the biggest losers of property tax amnesty scheme. Tax payers have to pay more than the people with black money. Similarly, genuine buyers with white money will be unable to afford to buy properties due to sky-high prices. The purchasing power of real home buyers is very low as compared to people with black money. Home ownership will decline and renters will increase.

Recommended:
Pakistan property tax 2016

(39) Comments

  1. is the property markete going better now in karachi as i want tosell my 2 bed d/d flat in gulshan iqbal block 4 in sb project with lift.what should it real cost these days as i want to sell it in 45 last and the markete around it is 55 demanding but agents r saying that markete is not as much?

    Reply
    • Faisal
      Agents are right
      People are asking too much and increasing the asking price but sale price is much low
      I would say you should try to sell your flat at 50 LAC and first see that what people are offering you

      Reply
  2. Ibrahim

    on   said 

    Ibrahim
    thanks for reply friedn. As i mentioned before the actual price from today’s FBR rate is 40 lac’s. Which FBR will accept ?
    No need to pay 3% for white money for actual price of 40 lac’s and someone can buy another property with the 40 lac’s which is the actual price?
    What about another 40 lac’s which is the profit of during 6 years, if he buy another flat of 40 lac’s which is the profit, he has to pay 3% for white money?
    Is It so simple like FBR are saying pay 3% and convert your money to white money?.
    another question is’ If some book property on booking 6 year before, who work in another country by installment and know he wind up in another country and came back. As he didn’t work in Pakistan he is non-filer and he sent money with his friend and he brought when he came Pakistan into each visit and he has stamp on passport arrival and departure, as I mentioned before.
    Know his flat is complete and he want to sell, but Property is not on his name and he has passion letter and he sell.He has to pay 3% on 40 lacs which is actual price or will pay 3% on 80 lac’s.
    How much he will have to pay CVT, STAMP DUTY, TOWN TAX AND 3%?
    Is simple for pay 3% for white money no complication.
    You note one think my friend. The Pakistanis who are suffering in another country 15 to 20 years. The arrange money to buy one property on installment in his country when he came back at the old age to think that know I will sell the flat and will buy 1 shop and the rest of the life will pass with my family with respect but every time changing the rule how suffer them.

    Reply
  3. Ibrahim

    on   said 

    I have one question for overseas. If someone book his flat almost 5 to 6 years before on booking. Booking Price, for example, 40 lac’s, he sent his money 2 or 3 lac’s for installment with his friend after each 2 to 3 years and when he came he brought money together and paid.He complete his installment during 5 to 6 years.
    example: Property price is 80lac’s know after 6 years. He also has to pay 3% for white money. Even he has residence of other country and has stamp on passports.

    Reply
  4. Muhammad Nafey

    on   said 

    Dear. What about the tax for overseas Pakistani. If overseas Pakistani want to buy property will he pay 3 % additional for ammenesty

    Reply
  5. YOUSUF LODHI

    on   said 

    GHAR47
    I AM PRESENTING THE CASE IN A DIFFERENT MANNER AS FOLLOWS:

    ZAID PURCHASED A PROPERTY IN AUGUST 2016 AT FBR VALUE i.e Rs. 1-crore
    Zaid was a filer and will declare this transation in his INCOME TAX RETURN

    ZAID SOLD THE SAID PROPERTY TO ALI IN NOVEMBER 2016 at 1 crore 5 lac
    ZAID is a filer and will declare this transaction in his INCOME TAX RETUR

    BOTH OF THEM PAID TAXES AS PER FBR TABLE

    ””NOW THERE IS NO INVOLVEMENT OF DC RATE IN THIS PROPERTY”””

    ALI WANTS TO SELL THE SAID PROPERTY TO A THIRD PERSON SALMAN at a price of Rs. 1 crore 10 lac

    SALMAN IS NOT A FILER HAVING UN-DECLARED/BLACK MONEY

    QUESTION:
    1) WHAT SORT OF AND HOW MUCH TAX WILL SALMAN HAVE TO PAY

    2) WILL HE BE ASKED FOR “SOURCE OF INCOME”

    Reply
    • YOUSUF LODHI

      TWO PEOPLE PAY TAXES – BUYER & SELLER

      AMNESTY SCHEME

      Due to amnesty scheme extra tax will be calculated if someone is non-filer

      WHO WILL AVAIL AMNESTY SCHEME

      Only Buyers – Buyer will pay 3% tax to whiten black money – FBR will check all registries of last 5 years and for new transactions

      WHO WILL CHARGE FOR EXTRA 3%

      Government at the time of registry – Amnesty 3% is for buyers so that government traps all buyers of properties in last 5 years. This is why registrar will charge 3% tax on registry and FBR will send letters to all people who bought properties in LAST 5 YEARS

      YOUR CASE

      SALMAN WANT TO SELL PROPERTY AT 1.1 CRORE
      SALMAN WILL BE SENT LETTER BY FBR DURING REGISTRY TO SHOW INCOME SOURCE
      AS SALMAN HAS BLACK MONEY AND TRANSACTION TOOK PLACE AFTER 1 JULY 2016
      SALMAN HAS TO PAY 4% WHT AS PER BUDGET 2016 + 3% PANELTY FEE DUE TO BLACK MONEY (AMNESTY 3% TAX WILL BE COLLECTED AS EXTRA WHT)
      BUT SALMAN HAS BLACK MONEY
      SO SALMAN WILL PAY 7% AS WHT AT TIME OF REGISTRY (4% ORIGNAL + 3% AS BLACK MONEY PANELTY)

      3% PAID BY SALMAN
      IF FBR RATE IS SAME AS SALMAN PAID TO BUY PROPERTY. FBR WILL NOT ASK THE SOURCE OF INCOME
      IF TRANSACTION VALUE IS MORE THAN FBR RATE. FBR WILL ASK SOURCE OF INCOME

      HOW 3% WILL BE CALCULATED?
      REAL PROPERTY VALUE – FBR RATE = AA AMOUNT
      SALMAN HAS TO PAY 3% OF AA AMOUNT

      AGAIN
      AMNESTY SCHEME 3% TAX WILL BE CALCULATED AT TIME OF REGISTRY. FBR WILL SEND LETTER TO ALL PEOPLE WHO BOUGHT PROPERTIES IN LAST 5 YEARS.

      PROPERTY BOUGHT BEFORE 1 JULY 2015
      3% TAX ACCORDING TO REGISTRY VALUE OF PROPERTY / DC RATE

      PROPERTY BOUGHT AFTER 1 JULY 2015
      3% TAX ON DIFFERENCE OF MARKET VALUE – FBR RATE

      Reply
  6. GHar47: this means, property prices will start to rise immediately and go sky high in a week’s time? please advise.
    all my hopes shattered….

    Reply
  7. YOUSUF LODHI

    on   said 

    GHAR47
    PLEASE COMMENT ON THE SITUATION BELOW:

    ZAID PURCHASED A PROPERTY IN AUGUST 2016 AT FBR VALUE

    ZAID SOLD THE SAID PROPERTY TO ALI IN NOVEMBER 2016. BOTH OF THEM PAID TAXES AS PER FBR TABLE

    ””THERE IS NO INVOLVEMENT OF DC RATE”””

    NOW ALI WANTS TO SELL THE SAID PROPERTY TO THIRD PERSON SALMAN WHO IS BUYING FOR THE FIRST TIME IN HIS LIFE

    SALMAN HAS BLACK MONEY.

    AMNESTY SCHEME SAYS THAT 3% TAX TO BE PAID ON DIFFERENCE BETWEEN ”’DC RATE AND FBR VALUE”

    BUT NOW THERE IS NO INVOLVEMENT OF DC RATE AT ALL

    QUESTION: HOW WILL SALMAN, WITH BLACK MONEY, AVAIL THIS AMNESTY WHEN THERE IS NO INVOLVEMENT OF DC RATE AT ALL ???????

    Reply
    • YOUSUF LODHI

      CLARIFICATION 1
      This amnesty scheme is not for filer but non-filer. As filers are already paying taxes and they have declared their assets.

      CLARIFICATION 2
      This 3% is applied on buyers. For properties bought before 1 July 2016, buyer has to pay 3% tax according to registry value or DC Rates. For properties purchased after 1 July 2016 3% is according to the difference between FBR Rate and actual property price.

      For example.
      FBR rates is 20 LAC and I buy property for 20 LAC. Transaction is of 20 Lac so FBR will not ask the source of income. If I buy property for 40 Lac and FBR Rate is 20 LAC then FBR will ask the source of income. In this case I have to pay 3% tax / 60,000- on the difference between FBR Rate and actual property price.

      YOUR CASE

      FBR will not ask the source of income up to FBR Property Price Rates. But if transaction value is recorded more than FBR rates, FBR will ask the source of income.

      In the case you mentioned, FBR will ask SALMAN to pay 3% tax on the difference of FBR Rate and Property actual value.

      Read this blog for more clarification:

      https://www.thenews.com.pk/print/169083-Amnesty-scheme-for-real-estate-sector

      Reply
  8. KT Murad

    on   said 

    Setting aside all confusing technicalities at present, one thing is absolutely clear that ‘real estate industry’ which was part of negotiations is showing a general satisfaction on these amnedments. To me this is a vital sign that things generally agreed the way industry/sector required. Pls visit this link for details:

    https://www.google.com.pk/amp/nation.com.pk/business/03-Dec-2016/preif-to-govt-resolve-all-issues-of-real-estate-agents/amp?client=safari

    In addition and with no offence to anyone, I agree with some of the comments that administrator of this portal/blog should use ‘caution’ to post their views at first place. While scrolling down the web page of this website we see ‘amnesty coming’, ‘no amnesty coming’, ‘amnesty coming’…. repeatedly. Similarly on future pricing issues, I think one should be careful, cautious and clear in making a point of view with maximum details. Otherwise, people make false hopes and become dejected and felt hurt in the end!

    Reply
  9. YOUSUF LODHI

    on   said 

    GHAR47….PLEASE READ THIS MESSAGE AS I HAVE ADDED ONE MORE POINT. MY UNDERSTANDING OF THE FOLLOWING PARAGRAPHS IS CONTRARY TO YOUR BLOG

    PARAGRAPH NO. 1
    The government has decided to allow purchasers/investors of immovable properties to legalise/whiten the difference between the Federal Board of Revenue (FBR) notified values of immovable properties and DC rates/registered values on payment of 3 percent tax and the source of investment would be not be probed.
    According to the commentary of Ashfaq Tola Senior Partner Naveed Zafar Ashfaq Jaffery & Co, Chartered Accountants on the Real Estate Registration Scheme issued here on Wednesday, further amendments have been proposed vide Income Tax Amendment Ordinance, 2016. In addition to the amendments introduced vide Income Tax Amendment Ordinance, 2016, enacted on July 31, 2016, further amendments to Income Tax Ordinance, 2001 are proposed to resolve the concerns of business and real estate community.
    Ashfaq Tola informed Business Recorder that the differential amount between the FBR’s prescribed tables of immovable properties and DC rates has been proposed to be legalised on payment of 3 percent tax. The facility would be available to the purchasers of the immovable properties.
    The commentary of Senior Partner Naveed Zafar Ashfaq Jaffery & Co, Chartered Accountants said that under the Income Tax Amendment Ordinance, 2016, every person attesting or registering transfer of any immovable property is proposed to be made responsible for collection of advance tax at the rate of 3% from purchaser or transferee on amount calculated. It has also been proposed that the difference between registered value and value determined under section 68 shall not be considered for the purposes of section 111 ie the differential amount will not be charged as unexplained income and the amount, on which advance tax under section 236W has been paid, shall be allowed to be incorporated in books of accounts in tangible form.
    PARAGRAPH NO. 2
    1. Advance Tax on Purchase or Transfer:
    — Every person attesting or registering transfer of any immovable property is proposed to be made responsible for collection of advance tax at the rate of 3% from purchaser or transferee on amount calculated as under:
    A – B
    Where, A is the amount determined under section 68; and B is the amount recorded by the registering authority. The above tax collected shall not be adjustable.
    2. Unexplained Assets:
    — It has also been proposed that the difference between registered value and value determined under section 68 shall not be considered for the purposes of section 111 ie the differential amount will not be charged as unexplained income and the amount, on which advance tax under section 236W has been paid, shall be allowed to be incorporated in books of accounts in tangible form, Senior Partner Naveed Zafar Ashfaq Jaffery & Co, Chartered Accountants explained.
    Example: Mr A purchases an immovable property having registered value of Rs 5,000,000. The amount under section 68 is determined to be Rs 15,000,000. The amount of advance tax to be paid at the time of purchase/transfer shall be as follows:
    ====================================================================
    Under section 236K (Adjustable) 2% of 5,000,000 Rs 100,000
    ====================================================================
    Mr A will be entitled to record the investment in immovable property at Rs 15,000,000. However, amount of Rs, 5,000,000 will be required to be explained only. Sources of investment of Rs 10,000,000 will not be required to be explained, Ashfaq Tola added.
    ———————————————————————————————————
    GHAR47
    PLEASE CAREFULLY READ PARAGRAPH NO.1 ABOVE. IT DOES NOT INDICATE THAT 3% TAX AMNESTY SCHEME IS FOR TRANSACTIONS AFTER JULY 2016.
    IT IS FIGURED OUT THAT 3% TAX WILL BE CHARGED ON DIFFERENCE BETWEEN….DC RATE/REGISTERED VALUE…. AND FBR NOTIFIED VALUE…

    OBVIOUSLY NO PROPERTY WAS REGISTERED AT DC RATE AFTER 01 JULY 2016 BUT INDEED BEFORE. THEREFORE, THE TAX AMNESTY IS GIVEN ONLY FOR PROPERTIES REGISTERED AT DC RAT. OBVIOUSLY AFTER 01JULY 2016, ALL PROPERTIES WERE REGISTERED AT FBR NOTIFIED VALUE SO AMNESTY SCHEME DOES NOT APPLY TO SUCH PROPERTIES

    PLEASE COMMENT
    ——————————————————————-
    PLEASE READ PARAGRAPH NO. 2 ABOVE (Unexplained Assets)

    – HAVING REGISTERED VALUE: RS. 5,000,000/- (it means already registered at
    DC RATE before 01 July 16)

    PROPERTY NOW BEING REGISTERED AT FBR VALUE OF: RS.15,000,000

    3% TAX TO BE PAID ON DIFFERENCE WHICH IS: RS 10,000,000

    Mr A will be entitled to record the investment in immovable property at Rs 15,000,000. However, amount of Rs, 5,000,000 will be required to be explained only. Sources of investment of Rs 10,000,000 will not be required to be explained.

    IT CLEARLY INDICATES THAT THIS AMNESTY SCHEME IS ONLY FOR THOSE PROPERTIES WHICH ARE REGISTERED AT OLD DC RATE APPLICABLE AND ENFORCED BEFORE 01 JULY 2016…. AND…. ARE NOT REGISTERED AT FBR NOTIFIED VALUE EFFECTIVE JULY 2016

    ****ANOTHER INTERESTING POINT IS THAT DC RATE/REGISTERED AMOUNT OF RS: 5,000,000/- will be required to be explained.
    It means that property is already registered at DC RATE applicable before 01July 2016 and the amnesty scheme is restricted to such properties

    GHAR47
    DO YOU AGREE WITH MY MY POINT OF VIEW THAT THE AMNESTRY SCHEME IS MEANT TO BE FOR PROPERTIES REGISTERED AT DC RATE AND SOLD OR PURCHASED BEFORE 01 JULY 2016 ????

    PLEASE GET IT VERIFIED FROM SOME RELEVANT AND RELIABLE SOURCES AND THEN CONFIRM TO YOUR READERS IN FULL, FAIR AND AUTHENTICATED WORDS. THANKS FOR YOUR COOPERATION

    Reply
    • YOUSUF LODHI
      Many thanks for great contribution

      Things are getting clear now

      PROPERTY TRANSACTIONS BEFORE 1 JULY

      Old DC Rates & New FBR Rates
      For transactions of old DC Rates
      FBR will ask the source of income of amount property was registered. If property value by FBR IS 10 LAC but Property was registered at 3 Lac according to DC RATES. FBR will ask the source of income for 3 Lac and FBR will not ask source of income for other 7 Lac or total 10 LAC. If someone has no source of income like BLACK MONEY so person has to pay 3% tax on 3 LAC / DC RATES.

      NEW TRANSACTIONS AFTER 1 JULY 2016

      FBR will not ask the source of income up to the FBR VALUATION RATES. But if transaction value is more than FBR Rates so FBR will ask the source of income. In This case person has to pay the 3% tax on the difference between FBR Rates and market value / transaction value.
      EXAMPLE 1
      FBR Property value is 10 LAC and property transaction is 10 Lac. FBR will not ask the source of income.
      EXAMPLE 2
      FBR Property value is 10 LAC but transaction value is 15 LAC. Now FBR will ask the source of income. In this case people with black money have to pay 3% tax on difference between FBR Rate and transaction price. So people with black money have to pay 3% taxes on 5 LAC AMOUNT.

      Reply
  10. YOUSUF LODHI

    on   said 

    Author: Ghar47
    on November 29, 2016 at 7:21 am said
    Rizwan
    According to DAWN news today
    It has cleared that amnesty scheme will be offered for only for transactions before 1 July 2016.
    —————————–

    GHAR47
    WAS THE ABOVE MIS-QUOTED ??? HOW COULD A REPUTABLE NEWSPAPER LIKE DAWN PUBLISH WRONG AND UN-CONFIRMED REPORT AS STATED ABOVE. NOW IT IS ESTIMATED BY YOUR BLOG THAT THE AMNESTY SCHEME IS OFFERED FOR ALL TRANSACTIONS BEFORE AND AFTER 01 JULY 2016. THIS IS JUST UN-BELIEVABLE/INCREDIBLE.

    HOWEVER, MY UNDERSTANDING IS CONTRARY TO YOUR BLOG WHICH I HAVE FIGURED OUT IN A SEPARATE MESSAGE POSTED FEW MINUTES AGO

    YOUSUF LODHI

    Reply
    • rizwan

      on   said 

      YOUSAF BHAI GUD POINT….NEEDS TO BE CLARIFIED AND CONFIRMED….BUT ALL BROKERS R SAYING THERE IS NO TIME PERIOD AND EVEN EXPERT ON KAMRAN KHAN SHOW SAID THAT THERE IS NO TIME PERIODS SET…..KINDLY GHAR47 PLZ CONFIRM OF WHAT IS THE SITUATION AS YOUSAF BHAI HAS A VALID POINT

      Reply
      • Rizwan, YOUSUF LODHI

        Yes DAWN has different story that amnesty is for transactions before 1 July 2016

        But according to the NATION & BRECORDER its open-end amnesty scheme

        http://www.brecorder.com/articles-a-letters/187/109200/

        https://www.thenews.com.pk/print/169318-Stocks-end-at-record-high-oil-shares-rise

        TAX AMNESTY SCHEME IS EXPLAINED IN THE NATION BLOG

        1- EXtra 3 % will be collected as withholding tax
        BUYER: NON-FILER has to pay 7% WHT
        SELLER: NON-FILER has to pay 5% WHT

        3% TO BE PAID ON THE DIFFERENCE OF FBR RATE AND MARKET VALUE OF PROPERTY
        SO source of income will not be asked for declared value (DC OR FBR Rates) but on difference of Declared rates and Actual Property value

        SO ACCORDING TO IT, why someone will avail this amnesty scheme. In other words, how many properties are sold at DC / FBR Rates. 1% or even less. Majority of property prices are more than FBR rates

        FBR WILL BE AFTER ALL TRANSACTIONS AS BEFORE
        WHO WILL BE WILLING TO BE MONITORED BY FBR AFTER BECOMING TAX-PAYER?

        THIS IS WHY ALL AMNESTY SCHEMES HAVE FAILED IN PAKISTAN AND EVEN AFTER SO MANY AMNESTY SCHEMES ONLY 1% OR LESS PEOPLE PAY TAXES

        THIS SCHEME IS A BIG TRAP TO BRING PEOPLE TO TAX NET.

        https://www.thenews.com.pk/print/169083-Amnesty-scheme-for-real-estate-sector

        LETS SEE what direction market takes. Much will be clear in few weeks.

        Until now, after 3 days of amnesty scheme, no rise in transactions or prices.

        Reply
  11. YOUSUF LODHI

    on   said 

    PARAGRAPH NO. 1

    The government has decided to allow purchasers/investors of immovable properties to legalise/whiten the difference between the Federal Board of Revenue (FBR) notified values of immovable properties and DC rates/registered values on payment of 3 percent tax and the source of investment would be not be probed.

    According to the commentary of Ashfaq Tola Senior Partner Naveed Zafar Ashfaq Jaffery & Co, Chartered Accountants on the Real Estate Registration Scheme issued here on Wednesday, further amendments have been proposed vide Income Tax Amendment Ordinance, 2016. In addition to the amendments introduced vide Income Tax Amendment Ordinance, 2016, enacted on July 31, 2016, further amendments to Income Tax Ordinance, 2001 are proposed to resolve the concerns of business and real estate community.

    Ashfaq Tola informed Business Recorder that the differential amount between the FBR’s prescribed tables of immovable properties and DC rates has been proposed to be legalised on payment of 3 percent tax. The facility would be available to the purchasers of the immovable properties.

    The commentary of Senior Partner Naveed Zafar Ashfaq Jaffery & Co, Chartered Accountants said that under the Income Tax Amendment Ordinance, 2016, every person attesting or registering transfer of any immovable property is proposed to be made responsible for collection of advance tax at the rate of 3% from purchaser or transferee on amount calculated. It has also been proposed that the difference between registered value and value determined under section 68 shall not be considered for the purposes of section 111 ie the differential amount will not be charged as unexplained income and the amount, on which advance tax under section 236W has been paid, shall be allowed to be incorporated in books of accounts in tangible form.

    PARAGRAPH NO. 2

    1. Advance Tax on Purchase or Transfer:

    — Every person attesting or registering transfer of any immovable property is proposed to be made responsible for collection of advance tax at the rate of 3% from purchaser or transferee on amount calculated as under:

    A – B

    Where, A is the amount determined under section 68; and B is the amount recorded by the registering authority. The above tax collected shall not be adjustable.

    2. Unexplained Assets:

    — It has also been proposed that the difference between registered value and value determined under section 68 shall not be considered for the purposes of section 111 ie the differential amount will not be charged as unexplained income and the amount, on which advance tax under section 236W has been paid, shall be allowed to be incorporated in books of accounts in tangible form, Senior Partner Naveed Zafar Ashfaq Jaffery & Co, Chartered Accountants explained.

    Example: Mr A purchases an immovable property having registered value of Rs 5,000,000. The amount under section 68 is determined to be Rs 15,000,000. The amount of advance tax to be paid at the time of purchase/transfer shall be as follows:

    ====================================================================

    Under section 236K (Adjustable) 2% of 5,000,000 Rs 100,000

    ====================================================================

    Mr A will be entitled to record the investment in immovable property at Rs 15,000,000. However, amount of Rs, 5,000,000 will be required to be explained only. Sources of investment of Rs 10,000,000 will not be required to be explained, Ashfaq Tola added.
    ———————————————————————————————————

    GHAR47

    PLEASE CAREFULLY READ PARAGRAPH NO.1 ABOVE. IT DOES NOT INDICATE THAT 3% TAX AMNESTY SCHEME IS FOR TRANSACTIONS AFTER JULY 2016.

    IT IS FIGURED OUT THAT 3% TAX WILL BE CHARGED ON DIFFERENCE BETWEEN ‘ DC RATE/REGISTERED VALUE AND FBR NOTIFIED VALUE’…IT MEANS: THE PROPERTY WHICH IS REGISTERED AT DC RATE. OBVIOUSLY NO PROPERTY WAS REGISTERED AT DC RATE AFTER 01 JULY 2016 BUT INDEED BEFORE.

    THEREFORE, THE TAX AMNESTY IS GIVEN ONLY FOR PROPERTIES REGISTERED AT DC RATE…OBVIOUSLY AFTER 01JULY 2016, ALL PROPERTIES WERE REGISTERED AT FBR NOTIFIED VALUE SO AMNESTY SCHEME DOES NOT APPLY TO SUCH PROPERTIES
    ——————————————————————-

    PLEASE READ PARAGRAPH NO. 2 ABOVE (Unexplained Assets)

    HAVING REGISTERED VALUE: RS. 5,000,000/- (it means already registered at
    DC RATE before 01 July 16)
    PROPERTY NOW BEING REGISTERED AT FBR VALUE OF: RS.15,000,000

    3% TAX TO BE PAID ON DIFFERENCE WHICH IS: RS 10,000,000

    Mr A will be entitled to record the investment in immovable property at Rs 15,000,000. However, amount of Rs, 5,000,000 will be required to be explained only. Sources of investment of Rs 10,000,000 will not be required to be explained.

    IT CLEARLY INDICATES THAT THIS AMNESTY SCHEME IS ONLY FOR THOSE PROPERTIES WHICH ARE REGISTERED AT OLD DC RATE APPLICABLE AND ENFORCED BEFORE 01 JULY 2016…. AND…. ARE NOT REGISTERED AT FBR NOTIFIED VALUE EFFECTIVE JULY 2016

    GHAR47

    PLEASE VERIFY MY POINT OF VIEW FROM SOME RELEVANT AND RELIABLE SOURCES AND THEN CONFIRM TO YOUR READERS IN FULL, FAIR AND AUTHENTICATED WORDS. THANKS FOR YOUR COOPERATION

    Reply
  12. YOUSUF LODHI

    on   said 

    Author: Ghar47
    on November 29, 2016 at 7:21 am said
    Rizwan
    According to DAWN news today
    It has cleared that amnesty scheme will be offered for only for transactions before 1 July 2016.

    WAS THE ABOVE MIS-QUOTED ??? HOW COULD A REPUTABLE NEWSPAPER LIKE DAWN PUBLIC WRONG AND UN-CONFIRMED REPORT AS STATED ABOVE. NOW IT IS UNDERSTOOD THAT THE AMNESTY SCHEME IS OFFERED FOR ALL TRANSACTIONS BEFORE AND AFTER 01 JULY 2016. THIS IS JUST INCREDIBLE.

    ANYWAY, HOW WILL THE TAX SYSTEM WORK NOW ???

    1) WILL THE BUYER PAY 3% TAX TO WHITEN THE BLACK MONEY TOGETHER WITH WITHHOLDING TAX ON PROPERTY PRICE OVER 40 LAC ???

    2) WILL THE SELLER PAY 10, 7.5 OR 5% CAPITAL GAIN TAX AFTER WHITENING BLACK MONEY ????

    Reply
    • YOUSUF LODHI
      There is lot of confusion in the market about this amnesty
      According to DAWN NEWS amnesty is for Transactions before 1 July 2016
      There are also news that amnesty is for transactions after 1 July 2016

      But what was original news : THAT AMNESTY IS FOR ALL TRANSACTIONS

      BUYER
      Buyer has to pay 3% extra tax with addition to taxes implemented in tax amendments 2016-2017 (if buyer has black money)

      SELLER
      Seller has to pay 3% extra tax with addition to taxes implemented in tax amendments 2016-2017 (if seller has black money)

      Reply
  13. Hasan

    on   said 

    Oh my, why so crestfallen if an amnesty has been offered? Everyone’s so dejected.

    It hardly changes anything. Cheer up. Let me explain.

    I am quite hard-pressed to find any amnesty scheme offered since 1947 anywhere in the sub-continent to have even remotely been a resounding success. Resounding success is too grandiose a phrase here. In fact, all of them were abject failures notwithstanding the alluringly low rates to tempt the tax shy or holders of undeclared and /or illegal money.

    Why is that?

    The simple reason is that a thief or morally corrupt person remains the same unless forced (really forced) to convert. One can dangle as many generous amnesty carrots before him as one likes but the fish (and specially the big fish) invariably do not take the bait.

    Almost all amnesty schemes have the clause for potential punitive action by law for those who fail to avail themselves of the scheme. And yet the schemes fail miserably and repeatedly.

    Again, besides the simple reason, why is that?

    Because no one with undeclared and / or illegal money, let’s say parked in real estate EVER wants to become a tax filer. They know that otherwise law could get hold of them but it hasn’t done so in last 70 years so that represents a low threat; worth running the risk. Yes, a low amnesty rate maybe helps a bit but only just. Rates for last couple of amnesties were very low. Do you recall the success rate? Any guesses? Was it perhaps 60%? Or at least 25%?

    Well, it was about 1% of anticipated total in term of number of people who became filers or in terms of absolute amount of tax revenue realized. Actually results were even below 1%.

    The dual effect of not wanting to become a tax filer and low risk of punitive action by law, basically dooms amnesties right from the get go.

    Where does this great no-show currently leave 99% of the market? Exactly where it was i.e. going through a down cycle. Most are unlikely to avail themselves of this amnesty and therefore would not be able to continue to hoard ill-gotten wealth in future in property since FBR would enquire about source of funds …which our corruption addicts simply cannot divulge.

    Remember, once a tax filer one is forever on FBR’s radar. And the FBR too is changing its ways for the better. That’s a bit of a headache for Mr. Black Money. He is not just invested in property; he’s got a lot going on. And he definitely does not trust tax authorities that if he pays a certain percentage he’ll enjoy a stress-free life henceforth. It doesn’t work that way. The sources that generate his precious black / unaccounted for income are too vital to bring to anyone’s attention. The 3% rate might as well be 1%; still won’t convince him to become a filer. Societies do not become tax filers by virtue of amnesties. They become so by strength of actual punitive action i.e. when the common man sees big fish being punished. Then reform happens, tax base widens. Amnesties alone just don’t cut it. Never.

    So no, most black money doesn’t care much about amnesties.

    People with black money anyway have alternatives to paint it white without going through risk & hassle of becoming a tax filer with a permanent bull’s eye stamped on their foreheads with indelible ink. For one thing inward remittances via bank channels offer an ever-present, risk free amnesty.

    So I quite disagree with Ghar47 that prices shall now rise. Read the underlying signs. Good over evil is persevering. Sometimes life doesn’t offer straight line explanations. This nation is going through a metamorphosis and the gradually emerging reality appears to be headed towards lower corruption, better standard of living for general population, merit over nepotism, first world infrastructure, less deprivation, more justice, more equity. In short, we are morphing into a developed nation.

    Don’t be dejected by hiccups along the way. Those are nothing more than tiny bumps. In time most people in Pakistan shall become tax filers but not on basis of amnesties. It’ll happen when our institutions start performing better; a process that has already started.

    The corrupt are betting against the tide. These amnesties or perhaps some notorious corrupt person still roaming free are not indicative of the bigger war being won by negative elements in society. They are actually slowly losing but haven’t yet begun to see it. And of course they’ll fight tooth & nail to maintain their morally decadent status quo.

    Doesn’t matter if they (the negative elements) are not seeing that future is dark for them. You should believe and know that something good is evolving for honest, upright, ethically sound citizens of this country.

    Ghar47, trust your initial instincts ….with or without amnesties, limited in duration or not … property prices shall either continue falling or stay stagnant for years until general incomes based on white money start rising. That is the true nature of this tide.

    As I said, cheer up.

    Reply
    • Hasan
      Stunning analysis and definitely very encouraging for genuine buyers.

      LOVE THE POINT / all amnesty schemes have failed in Pakistan as no one want to be tax filer – just 1% people pay taxes in Pakistan

      I don’t think that property prices will further fall due to amnesty scheme. But price stagnation is more acceptable.

      Reply
  14. samina

    on   said 

    pehle mah sr ghar 47 wle keh rhe thay k agr amnesty scheme aa b gai to koi frak nh prega markt property se bhar jygy r property sasty ho jygy. r ab keh rhe hen k bhai bs ab geniine buyers becharay ragray jaen gy…. not good info gha47 wlo. 6 mah se logo ko kahani suna rhe thay ap. now u shocked everyone..embarrassing..

    Reply
    • Samina
      There was no story but all forecasts were according to the market developments in shadow of government policies.

      Government always insisted that amnesty scheme will be for limited period
      So in that situation property prices were sure to fall
      But now government has given amnesty without any deadline or time limits

      Therefore, now property prices will rise.

      We were right at that time as prices were falling and we will be right again this time as property prices will rise.

      Reply
  15. Mirza munawar hussain

    on   said 

    Judiciary must play its role by declaring amnesty 2016 as illegal being a Joke and injustice with real tax payers

    Reply
  16. Andil

    on   said 

    From what I understand….this Amnesty will generate revenue for the government by whitening the trillions invested in property market. However the Capital Gains Tax introduced in last budget will stay. Mean day traders and property flippers will be taxed 10% on the profits everytime they sell any property. But yeah those people looking to park their illegal wealth in real estate will be winners.

    Reply
    • Andil
      Nice analysis
      Yes government will get taxes
      Now onward reality sector will be used primarily to whiten black money
      transactions will increase but not to the level of May 2016 due to CGT

      Reply
    • Rizwan
      very sad day and in fact a setback for Pakistan. Now tax system is totally destroyed.
      Genuine home buyers are the biggest losers as now they cannot buy home. Owning a home in Pakistan for common man will be just a dream.

      Reply

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