ISLAMABAD: Real estate agents of the country were told by the National Assembly body set up to negotiate with the realty sector not to behave like traders who violate their agreements with the government over taxation issues.

`If we implement the tax rates that you are suggesting then all of you will be wailing the next day,` said the co-chair of the sub-committee of the NA`s standing committee on finance Mian Abdul Mannan at a meeting on Monday The meeting was attended by builders, developers and real estate agents from different parts of the country.

Mr Mannan added that the traders had askedfor a way out to become filers if the withholding tax was lowered but after the scheme was launched not even 10,000 traders had availed it.

Referring to a suggestion made by real estate agents where the tax rate on property transactions should be made one per cent of the market rate, he said: `Not only are you backtracking now, but are giving the committee a new suggestion.

Increased tax rates The government, after negotiations with the realty sector in July, increased tax rates on property transactions besides the minimum rates of property that were listed at the Deputy Commissioners` offices i.e.

DC rates, which were also increased.

However, the DC rates all over the country were still far lower than the actual market price at which property deals were settled.

At the beginning of the meeting, co-chair and MQM MNA Rashid Godil, said, `Please keep in mind that we are from the masses and we know the ground realities. We also know that if a property is sold at Rs30 million its price is shown as Rs5m at the registry because the DC rates are still very low.

He added that the government wanted to streamline this anomaly amicably.

A real estate agent tried to convince the MNAs that the tax collection system and tax collection mechanism in the country were flawed and the Federal Board of Revenue was only creating distortions in the business environment.

Discussing tax collection, Mr Godil askedrealestate agents what issues they faced.

`Tell me one thing, you get a commission on every deal so what is your issue with the taxes? We can also ask you to tell us how many taxes you file,` he said.

According to Asif Karim,who leads the real estate agents of DHA Karachi, the increase in taxes and enhancement of DC rates should be withdrawn for two to three years as the real estate business is currently facing a slump.

He said that the decisions made by Senator Ishaq Dar after extensive meetings with stake holders in July were vague and even incorrect.

Mr Karim`s statements further angered Mr Godil who asked the real estate agent if he was there when the agreement was finalised. When Mr Karim replied with a `yes`, Mr Godil said: `So why did you stay quiet at that time? If it was wrong then that was your decision too.

Meanwhile, Asif Jehangir, the chairman of the Association of Real Estate Agents DHA Lahore, highlighted that the tax rate was four per cent of the real deal price of property in Dubai. `But here,we are paying around28pc in taxes on property deals,` he told the sub-committee, adding that they should follow the Dubai model.

Mr Mannan exhaled heavily and offered to get one per cent tax on real prices of property transactions.

`You are paying 28pc to 30pc of DC rates which is already 10pc of the market price but the tax of one per cent of real price will be high, do you want it?` he asked.

Almost all therealestate agents started talking and suggestions by the Association of Builders and Developers (ABAD) saved the meeting from complete breakdown.

ABAD Chairman Mohsin Shekhani suggested that the government should allow the buyers and sellers with the option to opt for the existing tax rates or file one per cent of real price of property transaction whatever was higher.

Eventually, it was decided that the sub-committee would forward the suggestions to the NA`s standing committee on finance to be recommended to Finance Minister Ishaq Dar.