Withholding tax has been exempted from all kinds of construction material and provision of services except for cement and steel under the Ordinance.
ISLAMABAD: (UrduPoint/Pakistan Point News-April 17th, 2020) The federal cabinet approved an Ordinance to provide incentives to the construction industry to provide work to the workers and daily wagers amid fight against Coronavirus here on Friday.
Under the new Ordinance, withholding tax has been exempted from all kinds of construction material and provision of services except for cement and steel. Howeve, fixed tax regime has been introduced for builders and developers.
The new ordinance has benefited the builders and developers as they can take 10 percent profit after paying taxes.
Tax been reduced by 90 percent for low cost houses to be constructed under Naya Pakistan Housing Authority.
The incentive package will be applicable for projects to be initiated before December 31, 2020, and for all the incomplete schemes which are ongoing.
According to the ordinance, it will be mandatory for developers and builders and to get their projects registered with Federal board of Revenue (FBR) through IRIS web portal.
Furthermore, one time exemption has been given on capital gain tax for the house measuring 500 square yards and flat of 4000 square yards. The government has also decreased advance tax on auction of properties to five percent from ten percent while sales tax on construction services in Islamabad has been brought to zero.
Exemption has also been given on capital value tax in Islamabad on the pattern of Punjab and Khyber-Pakhtunkhwa provinces under the new law.
According to Radio Pakistan, 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 ninety 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 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 4000 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 incentivized package for the construction industry earlier this month in order to increase employment opportunities in the country in the wake of coronavirus outbreak.
