The salaried class paid nearly 360 percent more tax than the real estate sector during the first four months of the current fiscal year. According to provisional figures, the salaried class contributed about Rs. 193 billion in income tax between July and October, representing an increase of Rs. 13.5 billion over the same period last year.
In contrast, the real estate sector paid just Rs. 42 billion in withholding taxes during the same four-month window. This figure represents a 45 percent decrease, or a drop of Rs. 34 billion, compared to the previous year. This decline occurred even though property activity has picked up after the government reversed its policy of discouraging speculative investment.
The gap between salaried and real estate tax payments has widened by 360 percent in four months, with the sector’s tax payments having trailed the salaried class for months. FBR has also booked a Rs. 95 billion shortfall for July-October, with revenue growth of only 6.5 percent.
The shift in tax contributions follows a budget cut of advance tax on property sales from 5.5 percent to 2.75 percent and on purchases from 2.5 percent to 1.25 percent. The government did this after the IMF backed the 50 percent cut in June.
The impact of these rate cuts is detailed as follows:
Advance tax on property sales fell from Rs. 52.7 billion to Rs. 27.3 billion, a drop of 48 percent.
Tax on property purchases fell from Rs. 23.1 billion to Rs. 14.7 billion, a drop of 37 percent.
Wholesalers and retailers together paid Rs. 24.7 billion, up 2.5 percent.
Retailers and the real estate sector together paid only Rs. 67 billion, Rs. 126 billion less than the salaried class.
