Federal budget for the fiscal year 2021-22 was announces recently during the ongoing month. The budget appeared quite citizen friendly, however few segments of the society weren’t that happy with it. There are certainly few obvious reasons of it that why few businesses and individuals aren’t that much happy with the budget. The businesses including the realtors working within the state had few reservations, and we have decided to pen down what those reasons are. Today’s post sums up the federal budget for the fiscal year 2021-22 and its impacts on the real estate business in Pakistan. Keep reading through the lines to have a detailed overview of the subject. So without further ado let’s dig deep into today’s topic.
Federal Budget 2021-22 Key Highlights
The total volume of the budget for the year 2021-22 is 7294 Billion which is coined as almost 11 percent lesser than the one we have last year. The funds allocated to various sectors in this budget are quite generous, however the allocation to the liabilities remain there as they were for years.
The net estimated collection of revenue is almost 6% more than that in the previous budget and the federal provincial parity is quite at par like previous fiscal years. The provincial share stands at parity and is estimated to be around 2,873 Billion.
The taxes are equally important for the smoother and hassle-free operation of the state and the government has laid special attention in this regard. The total FBR taxes that are to be collected in current fiscal year are around PKR 4,963 billion, while the non-tax revenues for the upcoming year are estimated to be somewhere closer to PKR 1,108.9 billion. In these taxes the share for the provincial government is PKR 2,873 billion.
Budget 2021-22; Impacts on Real Estate Business
The realtors and investment persons aren’t looking that much happy with the federal budget 2021-22. There are certain bases on which they claim such a big thing and here’s why:
Unified CGT instead of box
The first reason that the realtors or anyone involved in the real estate business isn’t happy with this budget is that the federal government has imposed a unified CGT. Previously the Capital Gain Tax (CGT) was collected as 2.5 to 10 pc depending on how long and what type of property you are holding. While now, you will have to pay a straight 5pc to the government on whatever property you hold for how much of the time doesn’t matter.
The realtors exclaim that this is impractical and the business community involved in the real estate sector will have to suffer a lot due to this decision. However, the premier invited the president and chairman of the federation to the PM House, and both the parties look quite confident that they’ll soon come to a conclusion.
Ease to the Construction Sector
While CGT seems as a big deal for the people involved in buy and hold, or buy and flip businesses, the construction people aren’t looking that much perplexed due to this budget. The government has cut the taxes and provided ease to the people involved in the construction businesses. Rather, the government has allocated special funds for the businesses to grow.
Since the economic growth of a country depends directly on the construction and infrastructure development within the state, that’s why the governments do lay special attention to all these endeavors. In addition to this, they also have reduced the price of cement by 2 rupees to give extra relief to the business persons and the individuals who would like to construct their homes recently.
Naya Pakistan Housing Project
The Naya Pakistan Housing Project is there for as long as the current government is here. The incumbent government has this very thing in their manifesto that they will provide ease to the people with lower income to make their own roof on their heads. This thing was quite visible in the current budget too, as the government has dedicated or you can also say allocated fully the fund of PKR 30 Billion to provide additional subsidy to this program.
All the outcomes of the program seem to be quite fruitful for the nation and specifically for the people that belong to lower income groups. The premier is looking quite confident as the program will spin the wheel of economy more efficiently, creating employment opportunities for people associated with the construction business and banking sector.
No amnesty scheme
No amnesty scheme has been launched in this fiscal year. In previous years the government has announced the amnesty schemes and derived a good chunk of revenue from it.
While, the current government doesn’t seem much interested in announcing any such scheme for the people, it seems not very alluring to the persons involved in the construction business. The amnesty programs offer that no trail will be asked from the people who register themselves as tax payers and people benefit hugely from it by getting registered and in the same way greater incentives are won by the state.
The government has laid special attention to the businesses like automobile, tourism and small industries, but seems that they have missed on the realtors. The policies formed are much against the real estate business like removing box CGT while it doesn’t affect the construction people much. However, the individuals involved in the business seem confident that these things will be reverted and the next one year will unfold much of new forms about the post-covid economy.