REALTY revenue faces a slump
Revenue collection from realty transac tions have dropped by almost 40 per cent in the first 10 months of the current fiscal year as compared to the same period last year. The house and land registration revenue collected up to mid-May this fiscal is Rs 2.66 billion against Rs 4.38 billion last mid-May. Similarly, statistics for the period show a substantial decline in revenue collection at all the five Land Revenue Offices (LROs) -Kathmandu, Lalitpur, Bhaktapur, Kalanki and Chabahil -in the valley. “This slowdown in revenue collection is the outcome of change in monitoring policies and directives of Nepal Rastra Bank. Provisions like income source disclosure and imposition of capital gain tax on realty transactions have hit the business,“ said Kamal Timalsina, under secretary at the Department of Land Reform and Management. The Ministry of Finance has fixed the target of collecting Rs 6.30 billion from the realty sector this year. “Our target was estimated and set according to previ ous year's data. It seems am b i tious, but we have no alterna tive as we have to base it on last year's earnings and our targets need to exceed those collections. This is because revenue increases with each passing year in almost every sector. But realty is proving to be an exception, and we have no hopes of fulfilling our target this year,“ he added . A similar concern is echoed by realty developers, who attribute the drop in revenue collection to Nepal Rastra Bank's cap on realty loan exposure by commercial banks, provision of income source disclosure and imposition of capital gain tax on realty transactions. In addition, liquidity crunch in the banking system has worsened the situation. According to Om Rajbhandary, chief executive officer of Comfort Housing, increase in capital gain tax leads people to undervalue the transaction, and people are still holding their money and are unaware about using their assets as a financial tool and investment. Beside this, decrease in land price is also responsible for decrease in revenue. “Compared to last fiscal year, there has been a decrease in transactions, which is proven by the fact that substantially lesser number of people are coming to us for registration. The decrease in land price, besides liquidity crisis and strict new provisions, are also responsible for the slump,“ shared Hari Krishna Timilsina, chief of Dilli bazaar LRO. According to housing Source: LORs developers, the situation is still slack, though the Supreme Court recently scrapped the government's decision that had made it mandatory for realty developers and individuals to carry out realty transactions worth more than Rs 5 million through bank cheques. “We have suggested change in some policies in the next budget,“ said Timalsina. Developers are pinning their hopes on the next fiscal year's budget
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source: The Himalayan Times