ISLAMABAD: In a bid to promote the documentation of the real estate sector and curb untaxed money, the federal government is reportedly planning to extend the benefits of the Real Estate Investment Trust (REIT) scheme for another three years.
According to sources, the Federal Board of Revenue (FBR) is expected to propose the renewal of the benefit provided for the transfer of shares/property to a REIT scheme, as outlined in Clause 99A of the Second Schedule of the Income Tax Ordinance (ITO), until June 2026.
The extension of this provision aims to support ongoing efforts to document the real estate sector, which has been plagued by substantial amounts of untaxed funds being parked in various transactions.
Currently, under Clause 99A, profits and gains derived from the sale of immovable property or shares of Special Purpose Vehicle to any type of REIT scheme are set to expire by June 30, 2023.
If the extension of Clause 99A is not implemented beyond 2023, it could discourage transactions involving REITs, which would hinder the overall goal of documenting the real estate sector.
By extending the exemption provided by Clause 99A beyond 2023, the prevalence of off-the-books transactions will be minimized, fostering the growth of the REIT sector.
This, in turn, will enhance investor confidence in a regulated real estate market.
Additionally, the extension will contribute to the promotion of agricultural and industrial warehousing, as well as the outsourcing of cellular towers.