KARACHI: The
price of a 500 sq yd plot in Phase 8 of DHA, Karachi, is Rs70 million
(equivalent to Rs140,000 per sq yd). However, the value fixed by the government
is only Rs1,980 per sq yd. The government therefore receives only Rs49,500 as
tax and stamp duty instead of Rs3,500,000 (which would have been the tax if
levied on the actual price). So, whenever a 500 sq yd plot in Phase 8 of DHA
changes hands, the government loses Rs3,450,500. In Phase 8 alone, 20 plots of
500 sq yd alone are transferred every day, so the government loses Rs20 billion
every year in this sector alone. Since thousands of transactions take place in
Karachi and the rest of the country every day, the annual loss to the exchequer
is mind-boggling, and this is due entirely to the flow of black money into the
property market.
The
amount of black money involved in Phase 8 alone is therefore Rs414 billion
every year. Imagine the quantum of black money flowing into the real estate
sector every year and the revenue lost by the government.
The only way to stop black money from
flowing into the real estate sector is for property registrars to ascertain the
true values of properties changing hands (this can be done by visiting several
web sites like zameen.com on the internet).
Before registering the transfer of a plot or house, the
registrar should advertise in newspapers asking buyers to bid for the property
being transferred. Only after this is done should the registrar allow the sale
of the property to the highest bidder, and recover stamp duties and taxes on
that value. This procedure is followed by the Customs Department which allows
importers to bid for those consignments which are suspected to be
under-invoiced (Section 25 of Customs Act). The SECP after strenuous efforts has
succeeded in driving out black money from the stock market. If such measures
are implemented by the government in the property sector, the state as well as
the honest tax-paying buyers will benefit, while tax thieves will be driven out
of the market.
Shakir Lakhani
Published in The Express Tribune, April 2nd,
2017.
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