FPCCI calls for abolishing Section 7E of income tax law

KARACHI: President of the FPCCI Atif Ikram Sheikh has repeated the collective demand of the business, industrial and trade sectors that Section 7E of the Income Tax Ordinance (ITO), 2001, which levies tax on deemed income, should be abolished for being unproductive and unfair.

According to Ikram Sheikh, Section 7E has produced no significant increase in tax revenue. Instead, it has created chaos and discontentment in the otherwise vibrant real-estate sector.The FPCCI president stressed that a real-estate regulatory authority (RERA) should be established in Pakistan like other regional countries, since no sector can perform at its optimum and contribute to the national economy in the absence of a regulatory authority. However, he added, that this should be done in consultation with the sector’s stakeholders.

He also highlighted that the Sindh government collects infrastructure tax on the import stage at 1.25 per cent; which translates into Rs225 billion per year. Logically, a good part of that tax should be spent on the infrastructural development and maintenance of Karachi. He added that if that happens, the city’s real estate will be in a much better shape and its market will also pick up.

SVP of the FPCCI Saquib Fayyaz Magoon maintained that real estate can help bring more foreign exchange to the country in the form of remittances. The sector should make attracting investment from overseas Pakistanis its top priority as it will also help the economy through stabilizing rupee-dollar parity and shore up foreign exchange reserves.

Magoon said that, any sector that can contribute to inward remittances should be facilitated and encouraged. Instead of investing in the real estate of other countries, the government should enable and welcome overseas Pakistanis to invest back in their home country, he added.

Convener of the FPCCI’s Central Standing Committee on Real Estate Property and Builders Syed Saquib Shah said the systemic shortcomings and lack of facilitation for the real estate sector can only be addressed through digitalization of the registration system. According to him, Karachi should also get an e-stamp system at the earliest like the one Punjab has.

Saquib Shah added that taxes are being unfairly imposed and that the phenomenon is bringing disenchantment and stagnation in the industry. He also emphasized that taxes should be imposed on property owners, instead of real-estate agents, who simply provide their services to buyers and sellers.