ISLAMABAD: So far an amount of Rs186 billion has been shown by investors in their bank accounts who have availed the government’s construction package that provides immunity against probing the source of investment.
Till now projects worth Rs186 billion have been registered with the Federal Board of Revenue (FBR) under the construction package, whereas, projects worth another Rs116 billion are in the pipeline.
Tax experts told Business Recorder that the Rs186 billion worth construction projects have been registered with the FBR.
This amount has not been deposited in the government treasury, but this amount has to be disclosed by the investors to avail the incentive of the scheme and immunity from probing the source of investment worth Rs186 billion.
Under the scheme, the amount is to be shown in the relevant bank account of the investor.
They said that the Section 111 of the Income Tax Ordinance empowers the tax authorities to require any person to explain the sources of his investments or assets, etc.
In case of unexplained investments or where the source of an investment represents escaped/concealed income, the fair market value of such investment or asset is taxed as income in the hands of such person which can also attract penalties and prosecution provisions.
The provisions of Section 111 have been made inapplicable in respect of capital investments to be made by a person in eligible new projects which has to be an investment as equity sources and should not include borrowed funds.
This means that an investor who fulfills the conditions below will not be expected to explain the sources of his investments to the tax authorities.
The person claiming the above immunity will be required to submit a prescribed form on IRIS web portal besides fulfilling the following conditions:
(a) Sole Proprietor
Capital investment (to be wholly utilized) made by a builder or developer being an individual/sole proprietor in a new project in the form of:
(i) Money - a new bank account is required to be opened wherein such sum is to be deposited.
(ii) Land - the individual must possess title to the ownership of land at the time of commencement of the Amendment Ordinance.
(b) Company or Association of Persons (AOP)
If capital investment (to be wholly utilised) is made by a person as a shareholder or member through a Company or AOP, as the case may be in respect of a new project, then such Company or AOP is required to be a single object (builder or developer).
If the capital investment by the shareholder or member is in the form of:
(i) Money - such sum is required to be deposited in the bank account of the Company or AOP through crossed banking instrument.
(ii) Land - such land for which the shareholder or member possesses title to the ownership at the time of commencement of the Amendment Ordinance is required to be transferred to the company or AOP by December 31, 2020.
Copyright Business Recorder, 2021
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