What is the Roshan Ghar Scheme in Pakistan?

 

Intriduction

The Roshan Ghar scheme is a groundbreaking initiative launched by the State Bank of Pakistan (SBP) to facilitate overseas Pakistanis in investing in real estate within their homeland. This scheme offers a unique opportunity for Pakistanis living abroad to contribute to the country's economic development while securing a valuable asset for their future.

Table of Contents

1. Introduction to Roshan Ghar
   • Overview of the scheme
   • Objectives and benefits
2. Eligibility Criteria
   • Requirements for overseas Pakistanis
   • Documentation needed
3. Investment Process
   • Steps involved in investing
   • Options for property purchase
4. Tax Benefits
   • Tax exemptions and incentives
   • Comparison with other investment options
5. Risks and Considerations
   • Potential challenges and risks
   • Factors to consider before investing
6. FAQs
   • Frequently asked questions about Roshan Ghar
   • Clarification of common misconceptions
7. Conclusion
   • Summary of the scheme's importance
   • Encouragement for overseas Pakistanis to participate

Introduction to Roshan Ghar

The Roshan Ghar scheme was introduced by the SBP in 2016 with the aim of attracting overseas Pakistanis' remittances back into the country for productive investment. The scheme offers a range of benefits, including:

• Tax-free repatriation of proceeds: Overseas Pakistanis can repatriate the proceeds from the sale of their property in Pakistan without any withholding tax.
• No capital gains tax: Investors are exempt from capital gains tax on the sale of their property.
• Easy access to financing: Banks in Pakistan offer competitive financing options for overseas Pakistanis to purchase properties under the Roshan Ghar scheme.
• Secure investment: Real estate in Pakistan is generally considered a stable and long-term investment.

Eligibility Criteria

To be eligible for the Roshan Ghar scheme, overseas Pakistanis must meet the following criteria:

• Overseas Pakistani: The investor must be a Pakistani citizen residing abroad.
• Valid passport: The investor must possess a valid Pakistani passport.
• Foreign currency account: The investor must maintain a foreign currency account in their name.

The required documentation for investment under the Roshan Ghar scheme typically includes:

• Copy of Pakistani passport
• Proof of foreign residency
• Bank statements from the foreign currency account
• Property purchase agreement
• Other relevant documents as required by the bank

Investment Process

The investment process under the Roshan Ghar scheme generally involves the following steps:

1. Property selection: Overseas Pakistanis can select their desired property from a wide range of options available in Pakistan.
2. Financing (if applicable): If necessary, investors can obtain financing from Pakistani banks through the Roshan Ghar scheme.
3. Purchase agreement: The investor enters into a property purchase agreement with the seller.
4. Remittance: The investor remits the required funds from their foreign currency account to Pakistan.
5. Property registration: The property is registered in the investor's name.

Tax Benefits

One of the most significant advantages of investing under the Roshan Ghar scheme is the tax benefits offered to investors. These include:

• No withholding tax on repatriation: Overseas Pakistanis can repatriate the proceeds from the sale of their property without any withholding tax.
• No capital gains tax: Investors are exempt from capital gains tax on the sale of their property.
• Reduced stamp duty: In some cases, investors may be eligible for reduced stamp duty rates.

Risks and Considerations

While the Roshan Ghar scheme offers several benefits, it is important for investors to be aware of the potential risks and considerations involved:

• Market fluctuations: The value of real estate can fluctuate over time, and there is a risk of property prices declining.
• Rental income: While rental income can provide a return on investment, there is no guarantee of consistent rental income.
• Property management: Managing a property from abroad can be challenging, and investors may need to rely on property management services.

FAQs

Q: Can I purchase a property in Pakistan under the Roshan Ghar scheme if I am not a Pakistani citizen? A: No, the Roshan Ghar scheme is exclusively for overseas Pakistanis.

Q: Can I use my local Pakistani bank account to invest under the Roshan Ghar scheme? A: No, you must use a foreign currency account to invest under the Roshan Ghar scheme.

Q: Can I purchase a commercial property under the Roshan Ghar scheme? A: Yes, you can purchase both residential and commercial properties under the Roshan Ghar scheme.

Q: Can I rent out my property in Pakistan if I purchase it under the Roshan Ghar scheme? A: Yes, you can rent out your property in Pakistan.

Q: What happens if I want to sell my property in Pakistan after investing under the Roshan Ghar scheme? A: You can sell your property and repatriate the proceeds without any withholding tax.

Conclusion

The Roshan Ghar scheme presents a valuable opportunity for overseas Pakistanis to invest in real estate in their homeland while enjoying significant tax benefits. By contributing to the country's economic development, investors can secure a valuable asset for their future and strengthen their connection to Pakistan.