More tax on mid-sized flats

REHAB worried about extra pressure on customers

The indirect tax to be paid for buying a mid-sized flat is going to increase to 2 per cent from the earlier rate of 1.5 per cent. This will put extra pressure on buyers, say industry insiders.

The new rate, proposed by finance minister AMA Muhith, will come into effect on July 1 this year.

Alamgir Shamsul Alamin Kajal, president of the Real Estate and Housing Association of Bangladesh (REHAB), told The Independent: “For a 1,100 sq feet flat, we expected the VAT rate to come down to 1 per cent, but it didn’t happen. The new rate, which is 0.5 per cent higher than the earlier one, will put extra burden on the shoulders of middle-class consumers.”                         

At present, 1.5 per cent VAT is charged for the sale of flats up to 1,100 sq feet, 2.5 per cent for flats up to 1,101-1,600 sq feet and 4.5 per cent for flats above 16,00 sq feet, he said.

Buyers of old and used flats are also likely to face higher cost because of the imposition of the 2 per cent VAT on the re-registration value of the apartment, he added.

On June 7, Muhith presented the proposed budget for FY2018-19. He announced a flat rate of 2 per cent VAT on the sale of flats sized up to 1,600 sq feet and kept the existing rate unchanged for the sale of flats bigger than 1,600 sq feet.  

The VAT measures come at a time when the REHAB has been demanding reduction in the registration cost of flats.

“At present, the registration cost floats around 14 to 16 per cent of the flat price, depending on a flat's size. We need a few things to come down to single-digit numbers. These are the interest charged for home loan and the registration cost,” said Kajal.        

The flat registration cost is higher in Bangladesh than in other South Asian Association for Regional Cooperation (SAARC) countries, he added.

Dr Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue (CPD), said that the extra tax burden will affect middle- and lower-income groups. He suggested a cut in the VAT rates to ease the tax burden on people. He also recommended fixation of flat registration fees, depending on the size of the flat ,in a bid to ease pressure on customers.

More tax on mid-sized flats

REHAB worried about extra pressure on customers

The indirect tax to be paid for buying a mid-sized flat is going to increase to 2 per cent from the earlier rate of 1.5 per cent. This will put extra pressure on buyers, say industry insiders. The new rate, proposed by finance minister AMA Muhith, will come into effect on July 1 this year. Alamgir Shamsul Alamin Kajal, president of the Real Estate and Housing Association of Bangladesh (REHAB), told The Independent: For a 1,100 sq feet flat, we expected the VAT rate to come down to 1 per cent, but it didnt happen. The new rate, which is 0.5 per cent higher than the earlier one, will put extra burden on the shoulders of middle-class consumers. At present, 1.5 per cent VAT is charged for the sale of flats up to 1,100 sq feet, 2.5 per cent for flats up to 1,101-1,600 sq feet and 4.5 per cent for flats above 16,00 sq feet, he said. Buyers of old and used flats are also likely to face higher cost because of the imposition of the 2 per cent VAT on the re-registration value of the apartment, he added. On June 7, Muhith presented the proposed budget for FY2018-19. He announced a flat rate of 2 per cent VAT on the sale of flats sized up to 1,600 sq feet and kept the existing rate unchanged for the sale of flats bigger than 1,600 sq feet. The VAT measures come at a time when the REHAB has been demanding reduction in the registration cost of flats. At present, the registration cost floats around 14 to 16 per cent of the flat price, depending on a flats size. We need a few things to come down to single-digit numbers. These are the interest charged for home loan and the registration cost, said Kajal. The flat registration cost is higher in Bangladesh than in other South Asian Association for Regional Cooperation (SAARC) countries, he added. Dr Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue (CPD), said that the extra tax burden will affect middle- and lower-income groups. He suggested a cut in the VAT rates to ease the tax burden on people. He also recommended fixation of flat registration fees, depending on the size of the flat ,in a bid to ease pressure on customers.