Published :
Updated :
For all latest news, follow The Financial Express Google News channel.
The government has decided to reduce a number of taxes and fees realised during property registration with a view to giving a much-needed fillip to the real estate sector.
The fiscal concessions are to cover stamp duty, Value Added Tax (VAT), local government tax and registration fee.
The finance minister recently approved a summary in this connection.
The National Board of Revenue (NBR) sent the summary with a detailed proposal to reduce the property registration cost in a coordinated way. The country's property transfer cost is one of the highest in South Asia.
Following the finance minister's instruction, the income tax wing of the NBR recently sent letters to the ministry of law, justice and parliamentary affairs, local government division (LGD), internal resources division (IRD) and VAT wing to bring down their respective registration charges and fees.
Apart from the amount paid as the price of a flat or plot, a customer needs to spend at least an additional amount equivalent to 15 per cent of the property value as registration cost.
According to the decision of the finance minister, stamp duty would be brought down to 1.5 per cent from 3.0 per cent.
VAT, payable by the land development authority, would be reduced to 2.0 per cent from 3.0 per cent.
Also, law ministry's fees and local government's tax would be reduced to 1.0 per cent from 2.0 per cent.
The existing property registration cost includes: 4.0 per cent gain tax, 3.0 per cent stamp fee, 2.0 per cent registration fee, 2.0 per cent local government tax and 3.0 per cent VAT.
Syed Shamim Reza, managing director of the Imperial Consultants and Development Limited, said realtors have long been demanding of the government to curtail the property registration cost.
At present, some 10,000 flats remained unsold as high registration cost is discouraging people from buying flats, he said.
He said the registration cost of property should be brought down to 6.0-7.0 per cent for new apartments.
The government is losing revenue due to the buyers' reluctance to register property, he added.
Anisuzzaman Bhuiyan Rana, a former leader of the Real Estate and Housing Association of Bangladesh who is now vice president of Construction Industries Skill Council (CISC), said the property registration cost should be brought down to single-digit to increase the flow of property transfer.
Along with other costs, a flat owner has to pay around 22 per cent of the flat purchase cost as registration fees, he added.
High property registration cost is leaving an adverse effect on the sale of flats as well as revenue mobilisation from this sector, he said.
Industry insiders said high property registration cost coupled with freeze on gas connection and high bank interest rates are also leaving an adverse effect on the sector.
In the budget proposal for fiscal year (FY) 2019-20, REHAB leaders proposed introducing secondary market for five-year old apartments at 3.5 per cent re-registration fees.