ABAD urges government to withdraw ST on services

Association of Builders and Developers of Pakistan (ABAD) has strongly urged the Sindh government to withdraw sales tax on services from builders and developers in upcoming budget. These views were expressed by the officer-bearers of ABAD in a pre-budget seminar held at ABAD house here on Thursday. The budget proposals of ABAD are strongly advocating the problems being faced by the builders and developers for years.
Speaking at a seminar, Chairman ABAD Mohsin Sheikhani said the authorities should pay attention to evolve long-term policy to revive the industry. He said the association is keen to pay its Corporate Social Responsibility (CSR) for the betterment of the society. For the purpose, the ABAD is presently striving to launch the low-cost housing scheme to meet the growing demand of shelters at affordable price.
"The proposal of low-cost housing scheme has been submitted to the authorities concerned and the Lyari Development Authority (LDA) in this regard has given consented to provide around two acres of land for the construction of 10, 000 units for homeless at reasonable price," Sheikhani said.
Earlier, vice chairman Arif Siddiqui proposed to the government to promulgate Charter of Economy (CoE) for sustainable growth in the country and added that the uniform policy should be implemented with no discrimination. Moreover, he said the construction industry, which is already down in the dumps, is facing adverse impact because of the negative area and profession lists of financial institutions and urged the authorities to play its part in eradicating the same to facilitate the common man at maximum.
Head of Economy Revival Committee and a south region chairman ABAD Saleem Kassim Patel while giving detailed briefing on ABAD budget proposals said the construction industry in Pakistan is not provided any incentives or facilities by the government. Rising prices of building materials is another factor contributing to slow development of construction industry. These factors have resulted in accumulating the backlog in providing housing units to the people. There is an annual shortage of roughly 0.45 million to 0.55 million housing units, he maintained.
He said the housing needs for Karachi Region based on conservative estimates are 126,000 housing units per annum. The urban housing need in the country is estimated at over 3.1 million and this figure is increasing due to increasing trend of urbanisation and legal and illegal immigration.
He regretted that the imposition of sales tax on services on construction industry by Sindh government is unjustified as the builders and the developers are not fallen in the ambit of service providers. Despite the fact that the Federal Excise Duty was withdrawn in the Federal Budget 2011-2012, the price of cement exhibited a steep upward trend without any apparent justification. Patel said the cartel of cement manufacturers has manipulated the price per bag of cement, which was Rs 270 in 2010 rose to Rs 365 in July 2011 and to Rs 410 in September 2011.
Moreover, he said the restriction imposed by the Sui Southern Gas Company to allow new gas connections for high rise buildings has affected the development of construction industry as without this facility, the construction companies would not be able to give possession of housing units to the allottees.
Similarly, the applications for new power connections have been pending since long, creating adverse impact on construction activity in Karachi. Moreover, he cited that the katchi abadi could get connection for Rs 7000 to 8000 but the charges for a new electric connection for apartments are Rs 100,000 to 150,000.
He said the ABAD has, therefore, proposed to implement National Housing Policy and urged the authorities to ensure the implementation of all recommendations of the National Housing Policy 2001 for the development of construction industry. Besides that the stamp duty should be reduced and the presumptive tax on construction companies should not be more than 1 percent on yearly receipts, he maintained.
The budget proposal of ABAD has also suggested that the banks and DFIs should extend credit facilities for balancing, modernisation and replacement of machinery used in housing and construction industry and the State Bank of Pakistan should direct commercial banks to allocate a certain percentage of the credit to housing sector and ensure a certain portion as minimum 5 percent of annual investment in housing mortgage from all commercial banks as like agriculture. It further recommended that the House Building Finance Company Limited (HBFCL) and other financial institutions should prepare and introduce packages at preferential mark-up to provide affordable credit to low income groups.