Tax break for flats proves futile | The Daily Star
12:00 AM, December 16, 2008 / LAST MODIFIED: 12:00 AM, December 16, 2008

Tax break for flats proves futile

Say developers

The government's tax holiday facility for the income generated from construction of multi-storied buildings outside urban areas has so far created no impact on builders as they find the offer economically nonviable.
The government in the present budget offered tax exemption for the next ten years for constructing multi-storied buildings outside the areas of city corporations, cantonment boards, and district municipalities, including municipal areas of Dhaka district.
Developers said the offer failed to create any impact on developers as the people in rural areas hardly can afford an apartment.
They said the government should bring upazila sadar areas under the purview of the exemption, as there remain demands for housing in those semi-urban areas.
Talking about the issue, Toufiq M Seraj, managing director of real estate company Sheltech, said: "I see no future of the offer because in rural areas, where land price is much more lower than apartment prices, people will live in their own houses instead of buying or renting an apartment."
"Why will people buy an apartment at Tk 25 lakh to Tk 30 lakh in rural areas when they can buy land and build houses with less amount of money instead?" he questioned.
Apartments are needed in the areas where lands are scarce and pricey, developers said.
"In addition to economic reality in rural areas, absence of utility service is another problem to tap the benefit of the exemption offer," said Tanveerul Haque Probal, president of Real Estate and Housing Association of Bangladesh (REHAB).
As the present tax exemption facility is not meaningful for the developers, they have informally urged government policymakers to ease the terms and conditions of the offer," said Probal, also managing director of Building for Future, a real estate company.
Soon REHAB will sit with National Board of Revenue (NBR) formally so the board brings some realistic changes to the tax exemption offer, he said.
Earlier the government took the decision of tax holiday for constructing apartments to retain the existing cultivable land and to provide inducements for investment in the development of planned housing in remote areas.
“Every year we are rapidly losing cultivable land due to increase in construction of buildings on those lands for housing purposes,” Finance Adviser Mirza Azizul Islam said in his budget speech.
Presently the government realises tax between Tk 150 and Tk 250 for each square metre of apartment depending on its size, the sector insiders said.

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