Govt rejects most of ABAD’s demands

ISLAMABAD: The government has rejected most of the demands of Association of Builders and Developers of Pakistan (ABAD) related to concession in tax rates till the announcement of upcoming budget for 2020-21, The News has learnt.

Now the rates of Sales Tax and Federal Excise Duty on construction material especially on cement would remain unchanged till the next budget. The ABAD representatives held meetings with the FBR officials and then they met with Adviser to Finance Dr Abdul Hafeez Shaikh here on Monday.

The Finance Ministry stated that the Adviser to the Prime Minister on Finance and Revenue chaired a meeting with a six-member delegation of the “Association of Builders and Developers of Pakistan” (ABAD) here on Monday.

The delegation was represented by Mr Hassan Bakhsh; various proposals were presented that could enhance and boost the property business in the country and improve tax collection for the government. The proposals were regarding taxation rates on property, building height restrictions in Karachi and rationalisation of property valuation tables and some other policy related exemptions that could help in smooth functioning of the property business and further accelerate the economic activity in the country.

The Adviser to the Prime Minister discussed the proposals in detail with the delegation and after taking the views of the Chairman FBR, assured the members of the delegation that all possible help will be provided to the sector keeping in view the principles of equity, transparency and fair play. The Adviser said that he realises the importance of the business and wants to engage more with the sector for better facilitation and understanding. He directed the delegation to further refine their proposals for a positive outcome and meet again in the second week of January so that the matters could progress ahead.

Meanwhile, the sources said that the FBR also rejected fixed tax scheme for developers and builders and deferred the Builders and Developers Special Procedure Rules 2019, however, assurances were given that the field offices of FBR would cooperate with them. Under the facilitation measures for the developers and builders, separate zones/circles have been constituted at the level of field formations.

The first issue raised by the ABAD was the fixed income tax regime. Under proposed scheme, the income computed and tax payable thereon shall be on ‘project-by-project' basis under the head of ‘Income from Business.' Tax payable thereon on annual basis (till the year of project completion) shall be computed at the rates mentioned. The said rates would be applicable to compute tax liability for the project for the tax years when the respective project is under construction. The annual tax liability on that basis shall be worked out as specified in the said rules.

The developer and builders requested the FBR for rationalisation of valuation table of immovable properties. The mistakes in valuation table may be rectified at the provincial level by forming a committee consisting ABAD representative, representative of real estate agent and FBR nominee. After five years, 25% discount on valuation of built-up property has been proposed and after 10 years 50% discount on valuation of built-up property. The timing be calculated after sub-lease or sale deed.

To dispose of pending cases and litigation, the ABAD has requested the FBR that the Chief Justice of Pakistan may be requested to form special benches at Supreme Court and High court level to dispose of pending cases of land and construction within 60 days.