ISLAMABAD: A presidential ordinance released on Tuesday has fixed tax rates for developers and builders in 14 cities of Pakistan.
Builders will now pay Rs250 per square foot for every commercial construction in the first category cities such as Karachi, Lahore and Islamabad. Residential construction on an area less than 3,000 square feet will cost Rs80 per square foot, and it will cost Rs125 per square foot on areas bigger than 3,000 square feet will cost.
Developers will have to pay Rs150 per square yard for any plot. For developers in industrial sites, the fixed tax rates for plots will be Rs20 per square yard.
Construction in 11 cities, including Hyderabad, Sukkur, Multan, Faisalabad, Rawalpindi and Quetta will cost Rs230 per square foot for every commercial construction. Construction of residential buildings on areas less than 3,000 square feet will cost Rs65 for each square foot. Whereas construction on land of 3,000 square feet and bigger will cost Rs110 per square foot.
For developers in these cities, the fixed tax rates range from Rs20 to Rs130 per square yard. For smaller cities the fixed tax rates will be less. For every commercial construction, the tax rate will be Rs210 per square foot. For residential construction in the area of 3,000 square feet, the tax rate will be Rs50, and Rs100 on a bigger area.
The fixed tax range for developers in smaller cities ranges from Rs10 to 100 per square yard. According to the Federal Board of Revenue, these fixed tax rates will mitigate tax evasion and hike revenue.
On April 4, Prime Minister Imran Khan announced tax amnesty scheme for realty sector – the second by his government in less than one year, allowing people to invest their black money in the construction sector without disclosing source of income.
The immunity from declaring source of income will be available only to builders and developers of the housing societies and projects and this has not been extended to building own homes.
But tax on gains on investment has been waived for all citizens who would want to sell their home.
The tax amnesty has been given as part of the Prime Minister Package to lessen impacts of infectious novel coronavirus outbreak on the construction sector.
“All the people investing in the construction sector this year will not be questioned about their source of income,” Imran announced. Before coming into power, the PTI chirman was a staunch opponent of giving tax amnesties.
Imran also announced to elevate the status of the construction sector to that of an industry. He said a board will also be formed to address all issues and matters related to the construction industry.
The PM said all industries that are connected to construction will continue to function even during the lockdown. He said the reason he was paying attention to the construction sector is that it generates jobs for daily wage workers, many of whom have lost their income due to the ongoing lockdown.
