For the property sector, the next Budget 2021-22 provides excellent stability. New government policies are in the works that will alter the perception of real estate in the long term. We may expect only positive outcomes in the real estate market so that we can plan for them.
- On cement, the FED is set at Rs1.75 per kg instead of Rs2 per kg.
- Lowering tax rates on financial gains from the sale of immovable properties
- If the buyer sells the private property after four years after the date of acquisition, there’ll be no tax on the profit generated. The highest tax exemption period has been cut from eight years to four years.
- The capital gains tax (CGT) rate on property sales will be cut by 25% per year.
- The government will not inquire about the source of funds used for construction (by builders and developers). In 2021, they will maintain the set tax on builders’ sales and up to a 90% decrease in taxes on low-income people’s house purchases.
- Provided an Rs30 billion subsidy to the Naya Pakistan Housing Authority to provide lower-cost housing to low-income Pakistanis.
Support to the Construction Industry from the Government
The Pakistani government included help for the property and construction industries in its budget for 2021-22. The government has lowered taxes and earmarked cash to aid the construction and allied businesses in this budget. It is an attempt to revive the country’s economic growth, as per a government official, and generate job opportunities. In addition, the FED for cement has been reduced from Rs 2 to Rs 1.75 per kilogram.
These incentives will have positive repercussions for the construction industry. The construction industry has a higher ability to offer to the nation. All construction-related industries will benefit directly, and the substantial economic expansion will only be a success.
The Tax Break for Naya Pakistan Housing Scheme
Prime Minister Imran Khan has established the groundwork for the Naya Pakistan Housing Scheme, which will give low-cost housing to Pakistanis. The nation has been dealing with various issues, including economic stagnation, trade imbalances, low agricultural output, and so on. The government feels that the housing industry, which comprises finance, building, and related building supplies, is the only one capable of simultaneously dealing with all of these difficulties. The Prime Minister thinks that his housing proposal will boost the economy and financial sector of the country.
The government would provide the Naya Pakistan Housing Authority with PKR 30 billion in subsidies. This subsidy is part of the next Budget 2021-22’s relief package, and its effects will be beneficial to the country. The working class will live in decent housing, the unemployment rate will drop, and the economy will gain new strength.
Did the government gives incentives to the under developing new cities like Park view city.
Possibility of Amnesty Scheme Resurrection
Individuals, organizations of individuals, and corporations who reported their assets under the scheme contributed up to $ 1 billion (PKR 121 billion) in tax revenue in 2018.
The government is presently not investigating the source of building financing (by builders and developers). In 2021, the government will keep the set tax on builders’ sales and reduce taxes on low-income people’s home purchases by up to 90%. However, since the global pandemic’s impact is slowing, there is a possibility that the government would revive the amnesty policy. The administration is expected to take this action to encourage more money into the development industry.
The Effect of Oil Prices on the Property Market:
Petroleum prices will remain unchanged as of May 1, 2021. The following are the prices:
- Petrol costs PKR 108.56 per liter.
- HSD PKR 110.76 per liter
- SKO PKR 80.00/liter
- LDO PKR 77.65 per liter
Lower petroleum prices have a favorable impact on the business as a whole. As a result, this decision will benefit every industry, including real estate. The machinery required to transport construction materials will consume less fuel, resulting in cost savings for housing societies.
Punjab Government Revises Property Rates:
For the 2021-2022 budget, the Punjab government has opted to adjust property tariffs after discussing stakeholders in their particular regions. There are now three separate property valuation rates in use.
- FBR is the first to be notified.
- Each district’s second assessment rate is communicated by the district’s DC.
- The real property valuation rate, which is dependent on the property’s actual market worth, is the third valuation frequency.
The Punjab Board of Revenue issued an official statement to all deputy commissioners & deputy collectors, stating that under Section 27-A (1) of the Stamp Act, 1899, and the Punjab Stamp (Market value Table in Regard of Immovable Property) Rules 1999, collectors have the power to notify the prices of properties in their jurisdiction.
In the wake of the epidemic, Pakistan has faced numerous economic and developmental issues. Every industry has seen losses, but they are progressively regaining their footing. Construction and real estate are among the lucky industries to receive grants and other developmental facilities in the budget for 2021-2022. Because businesses eventually reincarnate, the next six months will be vital and beneficial for brokers and real estate organizations.
Muhammad Junaid is a senior Analyst and Search Engine Expert. Extensive experience being a lead writer in Estate Land |Rudn Enclave. Work for years with local and international enterprises. Also, represent well-known brands in the UAE.