Cabinet okays ordinance providing incentive package for construction industry
ISLAMABAD: The federal cabinet on Thursday approved an ordinance giving legal effect to the incentive package for the construction industry, ARY News reported.
The package was announced by Prime Minister Imran Khan earlier this month to increase employment opportunities in the country in wake of the coronavirus pandemic.
As per the ordinance, a fixed tax regime is being introduced for builders and developers. There will be no withholding tax on the constructional material except cement and steel.
Under the ordinance, the tax has been reduced by 90 percent for low-cost houses to be constructed under Naya Pakistan Housing Authority.
The incentive package will be applicable for the projects to be initiated before the end this year as well as the ongoing incomplete projects, which will get themselves registered under this scheme.
The builders and developers will have to get their new and ongoing projects with the Federal Board of Revenue (FBR) through IRIS web portal.
Some important parts of the ordinance:
- One time exemption on capital gain tax for the house measuring 500 square yards and flat of 4000 square yards.
- Advance tax on the auction of properties has been reduced to 5 percent .
- Sales tax on construction services in the federal capital territory has been brought to zero.
- Provision of services has been exempted from withholding tax.
- Builders and developers can take credit of income / profit from project up to ten times of tax paid.
It must be noted that PM Imran Khan had earlier this month announced a “historic” stimulus package for the construction sector.
Prime Minister Khan said the government wants to push ahead with its fight against the pandemic without causing any hardships to the poor. The government is bringing incentives for the construction sector in order for all industries linked to it to resume functioning, thereby providing means of income to daily wage earners.
Unveiling the package for the construction sector, he said those who will invest in the sector will not be quizzed about their source of income with fixed tax to be levied.
If a person invests in any construction projects under the government’s flagship housing scheme, he will have to pay only ten per cent tax, Prime Minister Khan announced.
He said sales tax is also being cut in coordination with the provinces. There will be no capital gains tax for a family that sells its house.