Tax amnesty for construction sector: Rs50 to 250 per foot tax on three categories

ISLAMABAD: To give tax benefits and to cushion construction industry, the federal government has prepared the draft Tax Laws (Amendment) Ordinance 2020.

Since, the Senate and National Assembly are not in sessions hence the President of Pakistan will promulgate this ordinance shortly. Under the ordinance all areas of Pakistan have been distributed in three categories. In the Category-I, three big cities Karachi, Lahore and Islamabad have been included.

While Category-II consists of cities of Hyderabad, Sukkur, Multan, Faisalabad, Rawalpindi, Gujranwala, Sahiwal, Peshawar, Mardan, Abbottabad and Quetta. The remaining small and big towns of the country are included in Category-III. Maximum fixed tax slabs have been made for the cities of Category I. The fixed tax rate for Category-I commercial buildings, residential apartments as well as industrial buildings and plots have been finalised. The maximum fixed tax rate is Rs250 per square foot andthe minimum tax rate isRs50 per square foot for Category-III.

This ordinance will be promulgated throughout the country with immediate effect. Under this draft ordinance, the builders and developers will be entitled to benefit from new law from the first day of promulgation of this ordinance and they are bound to start their construction projects from December 31, 2020. They are also supposed to complete their construction projects by September 30, 2022. The builders and developers are bound to get the registration from the Securities and Exchange Commission of Pakistan (SECP). After the registration, the name of shareholders and builders will not be changed without the approval of SECP board. Through the proposed draft ordinance, the Finance Act 1989 and Income Tax Ordinance 2001 will be further amended. Under the ordinance, new Pakistan Housing and Development Authority will be constituted.

The draft ordinance facilitates the investors, builders and developers not to show the source of their capital being used in their projects. President of Builders and Developers Association of Islamabad Chaudhary Naseer Ahmad said that by the implementation of proposed ordinance, billions of rupees will be invested in construction Industry. Moreover, dozens of closed factories will start production which includes steel, cement, ceramics, electricity and other factories which manufacture the construction material. With this, tens of thousands unemployed Pakistanis will get reasonable jobs.