ISLAMABAD:(APS)May 23,2017-The Association of Builders and Developers of Pakistan (ABAD) has expressed serious concerns over the reported move of the Federal Bureau of Revenue (FBR) to abolish Fixed Tax Regime (FTR) for builders and developers saying that this move will discourage construction industry of the country and again open the gates of corruption, which is not anyway in the interests of businessmen and the country itself.
This was stated by Mohsin Sheikhani, Chairman ABAD. He was addressing a press conference at the National Press Club here on Tuesday flanked by Senior Vice Chairman ABAD Muhammad Hassan Bakshi and former Senior Vice Chairman Arif Yousuf Jeewa.
He said that members of ABAD have deposited Rs 150 million as 5 percent advance tax under the FTR during last four months of current fiscal year, which reflects a total FTR of Rs 3 billion, while the ABAD had committed to FBR that this sector will pay Rs 2 to 3 billion of the tax. He said that we have also said last year that the construction sector is paying almost Rs 80 million of minimum tax, which will be increased ten times if a corruption free Fixed Tax Regime implemented for builders and developers. But before this new mechanism could start working, the FBR brought the issue of new property valuation virtually blocking the way of new construction for almost six months and we could get NOCs for new construction from January 2017 and members of ABAD has paid Rs. 150 million as 5 percent FTR during four months and 20 days. In all the real estate sector has paid total taxes of Rs 18.50 billion under various sections of Income Tax Ordinance including section 7-C, 7-D, 236-C, 236-K and 236-W. Moreover, we expect more Rs. 4 billion tax collection form this sector during last one month and ten days of current fiscal year, which will bring to a total collection of Rs. 22.50 billion. Thus you can judge how much this sector is contributing to the national kitty, he added.
On the other hand, it is the fact that members of ABAD are involved in 25 percent of all construction activities of the country while other players are responsible for 75 percent construction throughout the country. He said that members of ABAD are more than willing to pay taxes and the government should give chance to FTR for at least three years instead of taking any decision on the basis of four months. The FBR should not press only ABAD members to realize tax target but also put its own mechanism to get advance tax from other people all over country who are going to construction a building or a house, he said adding that the government accepted only two suggestions of ABAD for current fiscal year instead of four suggestions of the association. Had the government accepted all four suggestions, tax collection could have been far better, he lamented.
Coming to the Low Cost Social Housing, being built by ABAD, Mohsin Sheikhani said that at present Pakistan is facing a shortage of 12 million houses and almost .
0.25 million housing units are added into this shortage every year. He said that if we only count on shortage of houses, it is a 180 billion dollar industry with nominal price of Rs 1.5 million to Rs 1.9 million of each house depending on location and price of the land. He further said the construction industry is providing 2.6 million jobs and if given incentives it go upto 5 million and jobs will also enhance in more than 72 allied industries. The ABAD has announced a Social Project in Islamabad which will be launched soon, he said adding that we are going to built this project with our own resources but we would like to ask the government to provide free of cost documentation and utilities and facility of One Window for approval etc for the benefit of general public.
He empathetically said that more than 50% of our population is residing in slums unplanned colonies generally known as Katchi Abadis, which is shameful for our country as well as creating law and order in the country. This is the reason why the ABAD has embarked on Low Cost housing
Senior Vice Chairman ABAD Muhammad Hassan Bakshi told that the ABAD had proposed that the government should implement a single property valuation system based on market value all over the country instead of present 3 tier system and tax should be only one percent instead of three percents of tax, which will not just increase the government revenue many-folds but financial institutes also will able to easily finance housing.
Replying to a question, Mohsin Sheikhani said that Income Tax officials have created atmosphere of fear among business community by raiding offices of many builders in Karachi during last some months, which is now stopped due to efforts of ABAD, however, they have not returned records of builders yet.
He appealed to Federal Finance Minister Ishaq Dar, Special Assistant to Prime Minister Haroon Akhtar and Chairman FBR Dr Irshad to continue FTR for at least three years because this system will be source of development of the construction industry which ultimately will be beneficial for national exchequer as well as create thousands of jobs.
Speaking on this occasion, Arif Jeewa said that the FBR should forget the past practice for collective good of the country. The economy relies on business enhanced business activities and highhanded practice will continue businessmen will be forced to look at other possibilities of investment and capital flight from Pakistan may start, he cautioned.