Pakistan property tax 2017-2018
Mr. Ishaq Dar presented the historic 5th and final budget of his current tenure as finance minister on Friday 26 May 2017. Taxes have been decreased & increased for different goods and sectors. Whereas real estate and construction sectors are concerned, budget once again failed to provide the much sought after relief by realtors. According to Mr. Ishaq Dar, all hard decisions have been taken to clean the real estate sector of black money and property speculations; a good move indeed.
Here is the outline of important points of budget 2017-18 related to real estate and construction sectors, Pakistan property tax 2017-18;
CAPITAL GAIN TAX
Capital Gain Tax on the sale of immovable property has been increased once again in the budget 2017-18. According to new laws, 15% CGT tax for filer on sale of property within 3 years of purchase and 20% CGT for non-filer. There is no difference in rate like previous budget, if property is sold out within one or two years of purchase. There are no changes in withholding tax.
TAX RELIEF FOR BUILDERS AND DEVELOPERS
The government has criticized the builders and developers for less contribution in tax during the fiscal year 2016-17. ABAD just contributed Rs110 million rupees in taxes as compared to Rs2.6 billion rupees in fiscal year 2015-16. In last budget, taxes were imposed on builders according to cities and type of construction, which have been withdrawn in this budget.
CEMENT AND STEEL WILL BE EXPENSIVE
This is the bad news for the people who want to build their homes. The government has increased the Federal Excise Duty (FED) on cement from Rs 1 Rupee per kg to Rs 1.25 rupee. Similarly, taxes on steel have been increased from 9% to 10.5%. Many construction experts have criticized this move, as it will increase the home construction cost.
INSURANCE OF SMALL HOME LOANS
The government is launching Risk-Sharing Guarantee Scheme for the low income people. The government will provide 40% credit guarantee cover to banks and development finance institutions (DFIs) for home financing of up to 10 LAC. The government has allocated Rs6 billion for this purpose.
GOOD NEWS FOR OVERSEAS PAKISTANIS
The Capital Development Authority will announce a separate sector for the overseas Pakistanis to make secured investment in real estate.
GWADAR, CPEC SPECIAL DEVELOPMENT FUNDS
The government has allocated Rs180 billion for development of CPEC and many other developments. The projects include New Gwadar International Airport, 200 bed hospital, 200 MW power plant, desalination plant and Gwadar master plant.