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PM’s Amnesty Scheme for construction sector: FBR to launch vigorous drive to lure builders to avail scheme

July 21, 2020

ISLAMABAD: After receiving dismal response on PM’s Amnesty Scheme for Construction Sector so far since April 2020, the FBR has decided to launch vigorous campaign to lure developers/builders to avail this scheme by registering themselves with envisaged deadline of December 31, 2020.

The response is so far not very encouraging so the now the FBR decided to go to the public for apprising full details with the potential developers/builders so that maximum people could get benefit out of it.

The FBR has made mandatory for registering with the tax authorities till December 31, 2020 for availing PM’s Amnesty Scheme for construction sector and disallowed payment of fixed tax amount after expiry of the scheme on September 30, 2022. All those could avail this scheme who owned registered land since April 17, 2020 when the Ordinance was promulgated. Now the registration with designated FBR portal has been set at December 31, 2020.

Citing example of last Amnesty Tax for which the FBR allowed paying of installments of due tax amount till June 30, 2020 for those who had availed this scheme but now some amnesty scheme beneficiaries approached the FBR for seeking further extension for getting permission to pay installment after expiry of last deadline June 30, 2020 on the pretext of COVID-19 pandemic but the FBR refused to entertain their requests.

“Only those will become eligible to get benefit who will get themselves registered with the FBR till the envisaged deadline of December 31, 2020 and deposit the amount into new bank account. The project completion deadline has been envisaged at September 30, 2022. After expiry of deadline and in case of non-completion of declared project the fixed scheme benefits will be disallowed” top FBR officials said on Monday.

The FBR’s top team including FBR Chairman Javed Ghani, Member IRS Operation Mohammad Ashfaque, Member IR Policy Muhammad Tarique and Dr Nauman briefed the representatives of builders/developers about PM’s Amnesty Scheme for Construction Package during arranged online webinar here on Monday and stated that up to 3000 square yard the per square yard tax rate will be charged and if the area of construction would exceed then the rate would be charged at Rs125 per square yard. There will be no cap on the size of construction as it could be constructed from 2 marla to any unlimited ceilings.

On point of availing this scheme by individuals, the FBR officials found confused so they promised to come up clarifications. The FBR apprised the developers/builders that the non-resident persons would have to file their income tax returns and registration with the FBR would be mandatory for availing the incentive package. The renovation business is not covered under the amnesty scheme.

The exemption from the provisions of Section 111 shall also be available to the first purchaser of newly-constructed buildings of a project if the purchase is made on or before September 30, 2022, in the prescribed manner. Thus, extension in the said deadline is not possible. The deadlines mentioned in the scheme have to be followed and cannot be extended, FBR officials said.

To a query Dr Nauman from FBR stated that the 90 percent reduction in taxes is available for low cost housing schemes of Naya Pakistan Housing Authority. The projects approved by the NPHA or Ehsas Programme would have to pay only 10 percent of their tax liability under the construction package.

The FBR officials said that the developers and builders can obtain temporary registration with the FBR in case of submission of partial data with the FBR's online system. If all approved documents are not attached, the temporary registration would be issued.

The FBR officials further informed that the immunity under the scheme is only available to the new projects. The provisions of Section 111 of the Income Tax Ordinance, 2001 shall not apply to any shareholder or partner of a builder or developer in respect of any amount invested as capital in a builder or developer or land possessed or acquired by the builder or developer, or its partner in case of a limited liability partnership or in association of persons, if the amount is invested as capital or the land is transferred on or before December 31, 2020 in the manner as prescribed and is utilised in a construction or development project in the specified manner.

The FBR will follow the registration deeds and would ensure to conduct random checking or sample checking for this purpose. As far as land valuation is concerned, the FBR has given criteria for land valuation under the package as for availing of the scheme the beneficiary will have to declare at 130 percent of FBR placed valuation rate.

The FBR will also issue a clarification in cases where the buyers have made full payments under the projects of this construction package, but the sellers would be unable to timely complete the projects.

When asked whether past projects are covered under the scheme, FBR officials responded that the scheme would be available to projects initiated before December 31, 2020 and existing ongoing projects registered with the scheme.

The new and ongoing projects would be required to be registered on the 'IRIS' portal of the FBR and the ongoing projects should tell about their completion ratio and need to pay taxes for the remaining work under the new fixed tax scheme.