Latest news with #Rs211
Express Tribune
27-03-2025
- Business
- Express Tribune
Real estate to recover after slump
Listen to article Experts forecast that the real estate market is set to rebound after a gap of two years in major cities, as macroeconomic indicators show brief stability and inflows of remittances from overseas Pakistanis continue to register higher growth. The savings rates offered by commercial banks have gradually dropped in tandem with the reduction in the policy rate. On the other hand, the equity market has seemingly touched its peak amid high risk, leaving real estate as the preferred choice and a safe haven for investors. Anosh Ahmed, a US-based real estate investor, said Pakistan's property market in posh societies and affluent housing schemes remains attractive for investors, mainly overseas Pakistanis residing in various countries. A number of local and foreign developers are introducing innovative ideas in living standards through different concepts of housing societies, which appeal to elite and upper-middle-class investors looking to park their savings for handsome margins in the future, he said. He pointed out that housing societies are also offering convenient payment plans for genuine buyers, such as paying 60% to 70% as a down payment, with the remaining amount payable in instalments similar to house rent. Ahmed also mentioned that lower policy rates have stirred up housing finance schemes offered by commercial banks. However, any specialised low-mark-up housing finance scheme will not only attract local and foreign investment in real estate but will also boost construction activities and the production of allied sectors. According to the State Bank of Pakistan (SBP), advances against mortgages surged to Rs246 billion by the end of September 2024, compared to Rs211 billion reported in December 2023. On top of that, the banking regulator slashed the policy rate from 20.5% to 12% during this period, which also influenced interest rates and increased demand for housing finance. Maaz Liaquat, a real estate consultant and former joint secretary of the Defence and Clifton Association of Real Estate, said trading in property has gradually increased over the last few months in select posh localities of major cities. Buyers and investors in real estate are actively engaging in development projects launched by foreign and local builders in coastal areas and upscale neighbourhoods. On the other hand, investment and trading in plots remain sluggish due to high taxes imposed by the government. A majority of property buyers, including overseas Pakistanis and long-term investors, are looking to generate profits through rental income and resale, he said. Businesspeople and investors earning margins from bank profits and the equity market are also shifting their investments to real estate. Several UAE-based developers are aggressively working on a range of residential and commercial projects. More than $14.6 million in foreign direct investment has been received by the country during the period from July to February of the financial year 2024-25, according to data from the State Bank of Pakistan.
Express Tribune
24-03-2025
- Business
- Express Tribune
Salaried class coughs up Rs331b in taxes
The salaried class paid staggering Rs331 billion income tax in the eight months of the current fiscal, which is 1,350% more than the taxes paid by retailers, but still not enough for the government to seek relief from the International Monetary Fund (IMF) for the marginalised segment. The total income tax contributions by the salaried people during July-February period of this fiscal year were Rs120 billion or 56% higher than Rs211 billion collected during the same period of the last fiscal year. The government of Prime Minister Shehbaz Sharif had targeted the collection of Rs75 billion additional from the salaried class for the full fiscal year 2024-25. The figure is already Rs120 billion higher and still four months are remaining in the close of the fiscal year. In the last year, the salaried class paid Rs368 billion in taxes. But despite this backbreaking burden on the salaried people, who pay taxes on the gross income without adjusting expenditures, the government did not take up the issue of lessening this burden with the IMF during the recently held talks. There were no discussions with the IMF to lower the tax burden of the salaried class, sources said. When contacted, FBR Spokesperson Dr Najeeb Memon said that the government would review the taxes on the salaried class in the upcoming budget exercise. In contrast to Rs331 billion paid by the salaried persons, the retailers, mostly unregistered, contributed merely Rs23 billion on account of withholding income tax on their purchases. The amount of tax that the traders paid under section 236-H was 1,350% less than the taxes paid by the salaried persons. The wholesalers and distributors also paid Rs16 billion withholding tax in eight months and ironic though almost half of them were unregistered with the FBR, said the sources. In the budget, the government had imposed 2.5% withholding tax on the traders in the hope that this would force them to come in the tax system. The increase in the rate did help collect Rs12 billion more from the traders but the intended objective could not be achieved. The traders passed on the cost of the additional tax to the end consumers. The government's Tajir Dost scheme to bring in 10 million traders in the net also failed badly and it has now stopped talking about it. The government was supposed to collect Rs50 billion from the retailers under the scheme, but it ended up collecting peanuts. The sources said that the FBR admitted before the IMF that the traders and the jewellers were the two hard nuts to crack. The FBR also confessed before the IMF that due to major design flaws, the Tajir Dost Scheme had failed. The IMF was briefed that the large traders also stopped the smaller ones from joining the scheme and as a result it could not expand the scheme to 43 cities. The FBR's plan to bring a minimum of 10 million retailers in the net had flopped, the IMF was told. The sources said that the Finance Minister Muhammad Aurangzeb had asked the FBR to begin the exercise to review the salaried class taxation with an objective to provide some relief. However, no such discussions took place with the IMF. In last June, the government massively increased the tax burden of the salaried persons by reducing the number of slabs, which put abnormal burden on the middle and upper middle-income groups. The maximum 35% rate is now unfairly charged at Rs500,000 monthly income and a 10% surcharge is also imposed, which takes the total tax rate to 38.5% for the highest slab. Where the government did not feel the pain of the salaried persons, it tried to negotiate with the IMF to reduce the tax burden of the real estate sector. The IMF did not accept the government's demand and has, for now, kept the rates unchanged. The details showed that non-corporate sector employees paid Rs141 billion income tax this year, which is higher by Rs42 billion or 43%. The corporate sector employees paid Rs101 billion in income tax, also higher by Rs37 billion or 56%. The provincial governments' employees paid Rs57 billion, up Rs28 billion or 96%. The federal government employees paid Rs34 billion, again higher by Rs14 billion or 66%. For the current fiscal year, the IMF has given Rs12.97 trillion tax target to FBR, which has already sustained Rs605 billion shortfall in eight months despite collecting Rs331 billion from the salaried persons. For the month of March, the tax target is Rs1.220 trillion that the FBR is again going to miss by a wide margin. Till Sunday, the FBR had collected Rs515 billion, leaving it with a gigantic task of generating Rs704 billion within this week. Friday will be the last working day before Eid holidays.
Express Tribune
30-01-2025
- Politics
- Express Tribune
Acrimony over the right to Indus water
Listen to article Punjab's allocation of an estimated budget of Rs211 billion for the construction of canals to channel water from the River Indus to the Cholistan region in South Punjab has sparked controversy. This project has raised alarm in Sindh, where residents fear catastrophic consequences for the province's 60 million inhabitants, who are already grappling with water shortages. Beyond irrigation concerns, the construction could harm local flora and fauna and exacerbate soil salinity. The plan has also triggered apprehension in Khyber-Pakhtunkhwa. Before discussing the rights of provinces over historic water usage, it is pertinent to note that the River Indus originates from the mountain springs northeast of Mount Kailash in Western Tibet. Flowing northwest through Gilgit-Baltistan, the river passes through Hazara Division and District Swabi in Khyber-Pakhtunkhwa. The Kabul River joins it at Khairabad, Nowshera (Khyber-Pakhtunkhwa), after which it flows southward into Punjab. The Panjnad River (formed by the Chenab, Beas, Jhelum, Ravi and Sutlej rivers) merges with the Indus at Mithankot. The conflict over the Indus River's waters dates back to the post-World War I era, involving disputes between Punjab, Sindh, Bahawalpur and Bikaner states. The British government initially acted as arbitrators to manage these disputes. However, tensions resurfaced after the partition, not only between India and Pakistan but also among Pakistan's federating units. Although the Indus Waters Treaty (IWT) of 1960, brokered by the World Bank, resolved disputes between India and Pakistan, it sparked new controversies within Pakistan. Under the treaty, Pakistan forfeited its rights to the Sutlej, Beas and Ravi rivers, upsetting the balance between water demand and supply. This loss created persistent tensions among Pakistan's provinces, straining the federal structure. The Constitution of Pakistan temporarily addressed provincial disputes over water through the Water Apportionment Accord of 1991. Signed by all four provinces, the Accord established allocations and a distribution mechanism for Indus Basin water. Its key features include: a) Protection of existing canal water usage in each province; and b) Apportionment of surplus river supplies (including floodwaters and future storages) among provinces. The Accord allowed for minimum water flows into the sea and stipulated that surplus or shortages would be shared among provinces. The agreed distribution was: Punjab 69.03 km³ (55.94 MAF); Sindh 60.17 km³ (48.76 MAF); Khyber-Pakhtunkhwa 7.13 km³ (5.78 MAF), plus 3.00 MAF from ungauged canals above rim stations; and Balochistan 4.78 km³ (3.87 MAF). The remaining river supplies (including floodwaters and future storage) were to be distributed as follows: Punjab and Sindh (37% each), Khyber-Pakhtunkhwa (14%) and Balochistan (12%). Total allocations under the Accord amounts to 141.11 km³ (114.35 MAF), plus an additional 3.00 MAF above rim stations. Despite the allocations, Khyber-Pakhtunkhwa remains unable to fully utilise its share. The province is allocated 8.78 MAF annually but uses only 5.97 MAF, leaving an unused resource of 2.81 MAF due to insufficient infrastructure. This issue was highlighted in the National Water Policy of 2018. The federal government had committed to approving the CRBC Lift-cum-Gravity Project for Khyber-Pakhtunkhwa, but the project never materialised. Furthermore, the federal government has failed to provide funds for its share of this Public Sector Development Program (PSDP)-financed project, perpetuating inequitable treatment of provinces. Consequently, Khyber-Pakhtunkhwa loses approximately 34% of its due share annually, as per the 1991 Water Accord. To ensure fair distribution and resolve disputes, the Indus River System Authority (IRSA) was established as a regulatory body. If grievances remain unresolved, disputes can be escalated to the Council of Common Interests (CCI). The Constitution of Pakistan, under Article 155, addresses complaints regarding interference with water supplies. It provides a mechanism for resolving disputes concerning hydro or thermal power station construction. Article 155 states: "If the interests of a Province, the Federal Capital, or the Federally Administered Tribal Areas, or any of their inhabitants, in water from any natural source of supply or reservoir have been or are likely to be affected prejudicially by: a) any executive act or legislation taken, passed, or proposed; or b) the failure of any authority to exercise its powers with respect to water use, distribution, or control from that source, the Federal or Provincial Government concerned may file a written complaint with the Council." Upon receiving such a complaint, the Council may render a decision or request the President to appoint a commission of experts in irrigation, engineering, administration, finance or law. This commission will present its findings, after which the CCI must record its decision on the matter. Both federal and provincial governments are then constitutionally obligated to implement the Council's decision faithfully. The constitutional framework and the 1991 Accord emphasise that contentious issues like water disputes must be resolved through mutual deliberation. Federalism provides mechanisms for the equitable collection and distribution of natural resources. Any deviation from these principles could encourage centrifugal tendencies, undermining national unity. In this context, no province should unilaterally decide on the use of the River Indus's waters. Adhering to the Constitution and respecting federal arrangements is crucial to maintaining harmony among Pakistan's federating units. Let us uphold the principles of federalism that bind our federation together.
