The federal cabinet has approved an ordinance giving legal effect to the incentive package for the construction industry.
Under 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. Provision of services has been exempted from withholding tax. As per the ordinance, tax has been reduced by 90 percent for low cost houses to be constructed under Naya Pakistan Housing Authority.
This 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 through IRIS web portal.
One time exemption has been given on capital gain tax for the house measuring 500 square yards and flat of 4,000 square yards. The construction industry will be eligible to avail the same kind of facilities available to other industries for the import of plant and machinery.
Advance tax on auction of properties has been reduced to five percent from 10 percent. Sales tax on construction services in the federal capital territory has been brought to zero on the pattern of Punjab. Exemption has also been given on capital value tax in the federal capital territory on the pattern of Punjab and Khyber Pakhtunkhwa provinces.
Prime Minister Imran Khan had announced the incentive package for the construction industry earlier this month in order to increase employment opportunities in the country in the wake of the coronavirus outbreak.
