PM to approve critical housing sector initiatives, focusing on tax rationalisation

ISLAMABAD: Prime Minister Shehbaz Sharif is poised to endorse a new package on Thursday (February 6) aimed at enhancing the housing industry, which includes a re-evaluation of the tax regime for the real estate sector.

Sources indicate that the Prime Minister will lead a meeting focused on housing sector issues, during which the recommendations made by a task force to tackle urgent housing challenges will be reviewed. The discussions will aim to finalise a growth framework and improve financing accessibility within the housing market.

The task force’s final recommendations include waiving subsection 2A of section 236C related to the 7E declaration and approval processes by the Commissioner, offering basic tax exemptions for properties valued at up to Rs 10 million, transitioning non-resident verification to an online system via NADRA, and establishing a uniform tax rate for both filers and late filers to eliminate disparities.

Additionally, the task force suggests eliminating section 7E of the Income Tax Ordinance, standardizing stamp tax rates across provinces and the Islamabad Capital Territory, abolishing the Capital Value Tax (CVT) in Islamabad, and promoting consistent tax policies through the National Tax Council. It also recommends waiving wealth reconciliation for investments in real estate and the construction sector up to Rs50 million.

Also read: World Bank urges Pakistan to implement tax on agriculture and real estate

Further proposals from the task force include adjusting property valuations every three years to align with market conditions and introducing exemptions from transaction taxes for specific categories such as low-cost housing, government plots, and first-time homebuyers.

Short-term recommendations entail reducing the policy rate to a single-digit figure, reinstating the MPMG Scheme to bolster developer confidence, reviving mark-up subsidies for low-cost housing loans, launching awareness campaigns and financial literacy programs for consumers, collaborating with real estate developers to provide mortgage financing options, and offering fixed-term loans with durations of 5, 10, and 20 years.

Web Desk Karachi