ISLAMABAD: The federal cabinet on Tuesday extended the fixed tax scheme for the construction sector till June 30, 2021.
According to sources privy to this development, the Cabinet Division had presented a summary before the cabinet pertaining to the ratification of a decision taken by the Cabinet Committee for Disposal of Legislative Cases (CCLC) in its meeting held on December 31, 2020.
Earlier, the Revenue Division had requested the CCLC to extend and slightly amend the fixed tax scheme for the construction sector, originally promulgated vide ordinance dated April 14, 2020. Subsequently, the cabinet committee gave approval to promulgate the Income Tax (Amendment) Ordinance, 2020.
The CCLC was informed that in the wake of the economic slowdown caused by the outbreak of Covid-19 pandemic and in order to boost the economy, the government had announced a comprehensive package of reforms for the housing and construction sector. The package inter alia included promulgation of the tax law (amendment) ordinance 2020 on April 14, 2020, which provided various tax incentives to the housing and construction industry.
The package received encouraging response but owing to the second wave of Covid-19 and certain procedural delays in registration of projects, most investors could not avail the benefits of the package within the statutory timeline i.e. December 31, 2020. This necessitated the extension in timelines prescribed in the said ordinance for various essential activities like registration as well as completion of projects.
The ordinance read that the builders or developers are bound to register the latest by June 30, 2021. In addition, builders or developers are also bound to complete the new or existing project by September 30, 2023. Earlier, it was September 30, 2022.
Moreover, the FBR may provisionally accept commencement of such project on a case to case basis where the builders or developers have taken all actions or done all things required and necessary to procure any approvals but any such approval is delayed beyond a period of 30 days from date of relevant application and the cutoff date of 31st day of December, 2021 is not adhered to by the builders or developers.
Besides, a declaration is provided in the registration from under eleventh schedule to the effect of percentage of the project completed up to the last date of the accounting period pertaining to the tax year 2019 or tax year 2020 at the option of the taxpayer.
The ordinance further stated that the additional partners or shareholders in a builder or developer after the 30 day of June, 2021, may join but additional partners or shareholders shall not be eligible for exemptions provided under sub-section (3) of section 100D.