In April 2020, the government announced a construction package, allowing people to invest in the real estate sector. According to the Federal Board of Revenue (FBR), the fixed tax scheme was applicable to builders and developers, who registered their projects with it. On Thursday, Premier Imran Khan, while fulfilling a major demand of the construction sector, granted one-year extension in the date for the fixed tax regime and also extended the waiver for disclosures of source of income for real estate investors till June 30, 2021.
The prime minister described the measures as a New Year gift for the construction sector. He also extended the date for completion of projects by one year. Government’s approval had given following incentives:
All the people investing in the construction sector this year will not be questioned about their source of income
The tax rate will be fixed for the construction sector, and builders/developers will be charged tax per square foot or square yard
People carrying out construction in the Naya Pakistan Housing Scheme for the poor will only have to pay 10 per cent of the fixed tax
Withholding tax will be waived off for all construction sectors except the formal sectors of steel and cement
Sales tax will be reduced in coordination with provinces
Any family selling their house will not have to pay any capital gains tax
A subsidy of Rs30 billion to be given for the Naya Pakistan Housing Scheme
Construction sector to be given the status of an industry
Construction Industry Development Board to be set up to support the sector
Imran Khan said that so far 186 projects had been registered with the FBR, under the construction package, while more projects worth Rs116 billion were in the pipeline. He added that work on 163 projects had been launched in Punjab, while projects worth Rs136 billion were in the approval phase. He added that the measures would generate an economic activity worth Rs 1,500 billion and create 250,000 jobs in Punjab alone.
Furthermore, government promised to provide of Rs30 billion as subsidy on loan for markup for the low-cost houses, with a maximum of 5% on five-Marla houses and 7% on 10-marla houses. Government will ask major development authorities like the Capital Development Authority (CDA) and the Lahore Development Authority (LDA) etc. to speed up approvals’ process.
Thank you Prime Minister and Government of Pakistan for your support in this critical timeframe.