Cabinet okays ordinance for construction industry

Cabinet okays ordinance for construction industry

Islamabad (Web Desk): The federal cabinet on Friday approved an ordinance for the construction industry.

The ordinance will give special tax breaks to builders and land developers.

Salient parts of the ordinance are listed below:

Tax levied on per square foot / per square yard basis.

For low cost housing projects, tax further reduced by 90%.

No withholding taxes on materials except for cement and steel.

No withholding taxes on services except those rendered by companies.

Builders and developers can take credit of income / profit from project up to ten times of tax paid.

Applicable to new projects starting before 31st of December, 2020 and existing incomplete projects who opt for taxation under this scheme.

Both new and existing projects would have to get registered with FBR by filing a prescribed form on IRIS web portal.

Existing projects would self-declare the percentage of completion and shall pay fixed tax for the remaining project under the new fixed tax scheme.

Exemption of tax on dividends paid to shareholders by builders and developers opting for taxation under this scheme.

Builders and developers who wish to take advantage of this scheme will have to deposit their investments into bank accounts by December 31.

These builders and developers will then be bound to withdraw money from these accounts for the investments.

The tax breaks will be applicable as soon as the ordinance is officially notified. Under the ordinance, those investing in land development schemes will not be asked about the sources or origin of their investments into the schemes.