THE Federal Board of Revenue (FBR) has prepared a package of incentives to stimulate growth of the otherwise choked construction and real estate sector. The proposed incentives include substantial cut in tax liabilities on builders’ income earned from low-cost housing schemes, exemption from income tax audit through computer balloting and revelation of source of equity investment besides field visits by tax officials.
The proposed measures would surely take care of some of the impediments that have marred development and growth of the real estate sector where investment, like other sectors, has shrunk substantially due to prevailing policies and drastic taxation measures. There had been demands and rightly so that all segments of the society especially construction and real estate should be made to pay their due taxes but the authorities has done this in a crude manner scaring away investment in an area that contributed widely to economic growth, money-making and job creation. Reduction of tax on low-cost housing schemes is obviously motivated by the desire of the Government to make its PM’s housing scheme successful but the cost of houses would not come down just by bringing down the rate of income tax. Prices of cement, gravel, sand, steel, tiles – widely used in construction have almost doubled during the last one year pushing the cost of construction beyond the reach of the common man. Similarly, punitive rate of CVT on sale of plots and houses before eight years of possession is also discouraging the business activity. These steps need to be reviewed if we are really interested to promote the housing sector.
