December 19, 2024 (MLN): The Association of Builders and Developers of Pakistan (ABAD) has demanded the removal of the 3% Federal Excise Duty (FED), which has been imposed on the real estate sector.
The association has submitted a proposal to the Prime Minister, further suggesting the introduction of a 1% withholding tax on property purchases under Section 236K.
The association proposed a tax-free status for first-time homebuyers.
This move is part of ABAD's broader strategy to address critical issues in the real estate sector and foster growth in the housing market, which is facing a severe shortage of 12 million units.
Additionally, ABAD recommends making property purchases by overseas Pakistanis tax-free to attract foreign direct investment.
The organization represents builders and developers across the country, ABAD’s recommendations are intended to address key challenges that hinder growth and investment in the sector, while also contributing to the country’s broader economic recovery.
The organization also highlighted the difficulty in obtaining refunds from the Federal Board of Revenue (FBR) when property is purchased with tax-paid money by filers.
ABAD argues that FED is typically used to discourage demand for harmful goods like tobacco and alcohol, not for the real estate market.
The duty has caused a negative perception of the real estate sector and has led to legal challenges in provincial courts.
Furthermore, industries closely tied to construction, such as cement, steel, and ceramics, are struggling with underutilized capacity, exacerbating the issue.
ABAD has also proposed a 10-year fixed-rate mortgage product linked to the 10-year Pakistan Investment Bond (PIB) yield.
With a down payment requirement of 15-20%, this initiative could enable more Pakistanis to afford homeownership, expanding access to housing.
The proposal includes calls for effective foreclosure laws to ensure the success of mortgage financing in the country.
The association raised concerns about the significant outflow of capital from Pakistan, especially to markets like Dubai, where tax burdens are much lower.
Non-filers currently face a tax rate exceeding 45%, which has incentivized investment abroad.
While ABAD supports penalizing non-filers, it has urged a more balanced approach that would allow real estate investment within Pakistan to remain attractive.
ABAD stressed the importance of prioritizing construction finance to boost the local economy.
The real estate sector supports 72 allied industries, including steel and cement, many of which are operating well below capacity.
ABAD has called for banks to treat construction as a priority sector for financing to stimulate economic growth and address the housing shortage.
With these proposals, ABAD is urging the Prime Minister to take swift action to create a more conducive environment for growth and investment in Pakistan's real estate industry.
The organization believes that with the right policies in place, the sector has the potential to unlock billions in investment and drive economic recovery, especially in light of falling inflation and lower interest rates.
ABAD commended the Prime Minister for his efforts to strengthen Pakistan’s economy and expressed hope that these recommendations will be given due consideration to accelerate sustainable growth in the real estate sector.
Copyright Mettis Link News
Posted on: 2024-12-19T10:55:46+05:00
