The Federal Government has proposed 15 percent tax on holding immovable property less than one year to discourage investment in real sector which is considered as non-productive for creation jobs and business activities.
According to the Finance Bill 2023, the government has increase the tax rates on sales and purchase of immovable properties including open plot, constructed property and flats in the country to grill the investment in real sector.
The details are as follows:
|S.no||Holding Period||Rate of Tax|
|Open Plots||Constructed property||Flats|
|1.||Where the holding period does not exceed one year||15%||15%||15%|
|2.||Where the holding period exceeds one year but does not exceed two years||12.5%||10%||7.5%|
|3.||Where the holding period exceeds two years but does not exceed three years||10%||7.5%||0|
|4.||Where the holding period exceeds three years but does not exceed four years||7.5%||5%||–|
During the budget speech in National Assembly on Firday, Finance Minister Miftah Ismail said that the tax system encourages investment in real estate sector which is not pleasant aspects, surely. This is hurdle for economic growth in the country, he further added.
He said, “it causes an artificial increase in the prices of real estate taking housing facilities out of the reach of the middle classes. The money generated from this dead investment is a major source of inflation and social disharmony”.
He made it clear that the government doesn’t want to discourage the real estate sector but it wants to steer this sector in a direction where it can become the engine of growth for cities. “Our proposals aim at encouraging construction, and vertical growth, and discouraging speculative investment in open plots, he maintained.