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Pakistan Tax Amnesty Scheme 2019

Pakistan Tax Amnesty Scheme 2019 and Real Estate Property Market

Recently PTI government has announced its first tax amnesty scheme. In past tax amnesty schemes were introduced in 1958, 1969, 1976, 1986, 1997, 1999, 2008 and 2016. Unfortunately all schemes failed to increase the tax results. Let’s discuss the impacts of Pakistan Tax Amnesty Scheme 2019 on real estate sector.

According to the Special Assistant to the Prime Minister on Accountability Mirza Shahzad Akbar; under the bailout agreement with IMF the date of Amnesty Scheme can’t be extended beyond 30 June 2019.

Who can and can’t avail Pakistan Tax Amnesty Scheme 2019

This scheme is available for individual defaulters and companies to declare their assets. A golden chance to whiten the money.

The scheme cannot be availed by individuals holding government positions after 2000

The scheme will not be applicable on cases being heard in court

Salient features of Pakistan Tax Amnesty Scheme 2019

Assets within the country and abroad (except for real estate) can be whitened after paying a rate of 4%. The whitened cash assets will have to kept in Pakistani bank accounts.

People who want to keep their whitened money abroad, a rate of 6% will be charged.

1% Tax for those declaring their properties by 30 June 2019 (property value will be considered 1.5 times more than the FBR Rate).

Why government has offered a tax amnesty scheme?

PM Imran Khan has said that he is against such schemes. But he wants that people should avail the last chance to declare their assets (benami bank accounts & properties and other assets). But according to Finance Minister Hafeez Sheikh, the amnesty scheme is offered so that tax net can be increased as Pakistani shadow economy or black economy is 70% whereas real economy is just 30%.

Impact of amnesty scheme on real estate sector

Unfortunately amnesty schemes have always failed in Pakistan. Results will be same this time. The following factors will greatly contribute to the failure of amnesty scheme;

Firstly there is no tax culture in Pakistan as people prefer to remain non filers.

Secondly most people consider such schemes as traps.

Thirdly duration of amnesty scheme is till 30th of June (just 45 days).

Reaction of estate agents

Most realtors have already marked the scheme as a complete failure because of wrong timing and short duration. Dealers say that amnesty scheme has failed to uplift the stagnant property market.

Dealers also said that property market will see a boost when property valuation rates and bank interest rates will fall. Unfortunately we will see increase in property valuation rates and bank interest rates in the coming months.

Prices are 40% down from peak of 2016 but haven’t bottomed out yet. So property market will be stagnant for years to come.

Recommended:
Pakistan Budget 2019-20 Property Taxes

15 Comments

  1. akbar Siddiqui

    on said  

    Sir,
    I am in private companies since 1980 working ,
    My company deducting some income tax from my salary .

    year a head i never file my tax return as income is cutting from company
    during my service i bought two plots 120 yard in 1980.
    I hvae all record with me ,
    Shall I go for amnesty (this is in name since 1980 till piece of land , present value Rs 400,000 each

    Reply
  2. Ghulam Mustafa Shakir

    on said  

    My name is Ghulam Mustafa Shakir, worked 37 years in Saudia and from 12th February 2018 moved in USA with Children on spending retired life . I am 67 years old. My question is
    I have one plot one kenal in DHA, Lahore obtained by lottery system and some cash fixed in bank . My wife has about 4 marla house in pakistan which is used as living.
    Please inform me whether I should be delclared this property ? if so how I can I declared as I am in USA. I cannot come to Pakistan as I have recently by passed and Dr. not allowe to travel. Last date is 20th June, 2019. Is there any site which help to declare my assests ? please let me know through my email.
    Thanks and Regards
    Ghulam Mustafa shakir

    Reply
    • RIZWAN
      Non filers are not allowed in Budget 2019-20 to buy property worth 5 Million or More. As per FBR this news is wrongly spread by some media houses.
      Secondly if some non filers buy’s or sell’s a property he/she will be taxes 100% more than non filers and has to explain about source of income.
      So very discouraging news for non filers. They even can’t buy vehicles.
      Yesterday dealers were very upset by the budget 2019-20.
      FBR has announced property valuation rate increase up to 85-100% depending of different regions.
      Thirdly another blow is that Capital Gain Tax will be collected up to 10 years instead of 3 years.
      First it want that there was no CGT if property was sold after 3 years.
      But now up to 10 years capital gain tax will be collected.
      So dealers were saying that this budget in ANTI REAL ESTATE SECTOR. As it will crash property price as capital will be diverted to other investment classes or sectors.

      Reply
  3. Looks like Malik sb your prediction related to real estate is going to be true after today’s budget announcement.

    Reply
    • Ahmad
      Yes
      FBR has cleared that NON FILERS Can’t buy property worth 5 Million or more and media houses are spreading the false news.
      The biggest issue is that FBR has planned to increase property valuation rate equal to market rate. This will make real estate transactions very expensive and volume will increase. This is the biggest worry of dealers. They told me today.

      Reply
  4. Farooq Lari

    on said  

    Anwaar sb.
    If your words for the last 1 year are taken to be true then prices would not have increased at all and instead would have decreased. I ask you one simple question. You can relate and read to my various queries from last year where you were advocating decrease in price. Look at lake City, Rahbar phase 2 and Halloki Gardens. Prices have sky-rocketed and we following your blogs about price decrease since last year have clearly lost the battle as the prices are now impossible to reach and buy plot for home construction.

    Reply
  5. If someone lives abroad ( maybe he/she is dual national), earn money abroad and send money to Pakistan in USD than how local income tax or other taxes will be applied to them.
    If same category applied to them as “who is earning money here” than why should he/she send money back to Pakistan.

    Reply
  6. rizwan

    on said  

    dc rates will be increased closed to market rates….ab pura white money lao gay tu he khareed sakogay kuch…and non filer white kahan say layga?? this will mean more decrease in buyers even though non filers condition might be lifted but still if any non filer buys he will be under radar of fbr and will be asked to provide proofs of income…. lets c wat happens

    Reply
    • Rizwan
      Dealers are very sad due to the recent developments.
      Dealers were expecting a decrease in valuation rates. Many say that market stagnation in part is also due to high property valuation rates that have made the property transactions expensive and volume has decreased.

      Reply
  7. muhamamd azeem uddin

    on said  

    Dear sir,
    Eid mubarak to you and your team.

    i have seen and it is almost majority of people of pakistan that to invest money in plot, flat, as they think that their money will be be double and triple with in years.

    And it is fact that those who invest money they got highly profit of their investment.

    Now Government and new PM is become very much eager to those people that they have pay taxes .

    it seems really a joke ?? sir those who have invest money in real estate they are QUITE. Because they still believe that after few months property prices again increase. so why they sell property and deposit money in bank , higher a lawyer give him fees and become a filer and start paying taxes. who and why ??

    This is the main reason Tax amnesty scheme have never been successes.

    now who pay taxes :

    1)those people who already have registered in tax they will pay more taxes
    2) direct taxes like , petrol, diesel, electricity, gas and with holding taxes.

    MONEY COME FROM REAL ESATE TO INDUSTRY :

    it seems quite impossible that money will come from real esate to industry because REAL esate giving much better return from manufacturing sector , with out any risk and hard work.

    FUTURE FORECAST PRICE OF REAL ESTATE: i will request Anwar ul islam sahab to give his prediction. However your mostly PRICE PREDICTION have almost found wrong, However i beleive khabi na khabi to such ho ga

    Reply

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