December 13: The real estate business is going through turmoil due to lack of concrete regulations by the government. At the same time, the government is losing huge revenue due to its inability to regulate the real estate business digitally.

Studies and reports conducted by government bodies at different times showed that the government is losing a large amount of revenue due to its own incompetence. Recent reports from the Revenue Board, Auditor General have suggested to conduct such transactions in the company model and details of all transactions be kept digitally. However, the government has not taken any action in this regard.

According to a recent report by the Nepal Revenue Advisory Committee, the real estate sector is one of the leading sectors contributing to Nepal's economy. It contributed eleven percent of the GDP in the fiscal year 2020/21. However, this sector has remained the most informal sector. The report states real estate prices in Nepal are extremely volatile, determined mainly by unauthorized local real estate brokers.

The report states that the government has not been able to regulate the sector as expected. The country is losing a lot of revenue as the trend of hiding the actual transaction amounts is increasing.

The study revealed that in developed countries the value of real estate business is determined scientifically by the government or the regulatory body and it is followed by all the stakeholders. Therefore, the study team had suggested identifying the sectoral problems in Nepal and to tax this sector through agencies.

The 58th report of the Auditor General had asked the government to strictly regulate the real estate sector  and stop the transactions through intermediaries. However, the Ministry of Land Management, Cooperatives and Poverty Alleviation has not taken any concrete steps in this regard. 

Last year, the Ministry of Land Management had made internal preparations to make arrangements for buying and selling land for real estate business only through 'companies' due to the rise in tax evasion and fraud cases when buying and selling land through individual agents. Ministry officials acknowledge that no progress has been made in this regard so far. 

Janak Raj Joshi, spokesperson of the Ministry, said that a ‘land market' has been set up to allow purchase and sale of land  through authorized bodies only but no conclusion has been reached. 

Lately, the revenue generated from  real estate business has declined . According to the Department of Land Management and Archive, the revenue from real estate transactions has decreased by three billion in the last three months of the current fiscal year. In July, the total revenue including service tax, registration fee and capital gains tax amounted to Rs 8.13 billion which has declined to Rs  5.49 billion by November.