Construction sector: SRB proposes to adopt Punjab model for revival

While the Punjab government is fully geared up to serve the construction sector, the Sindh government is expecting more from the federal government and the Federal Board of Revenue (FBR) before implementing the same.
Sources in the provincial tax machinery told on the condition of anonymity that the Sindh Revenue Board (SRB) is of the view that in order to provide a meaningful tool for the revival of the construction industry, the federal government/FBR need to exempt sales tax on cement, mild steel products, paints, tiles, sanitary products and fittings; exempt Customs duty and sales tax on imported construction machinery (not manufactured in Pakistan), exempt withholding income tax, capital gain tax and advance income tax on immoveable property-related activities and abolish FBR's valuation tables in relation to immovable properties.
According to a note prepared for the consideration of Sindh chief secretary, copy available with Business Recorder, the Sindh Revenue Board (SRB) has proposed to adopt the Punjab model, i.e. exemption of Sindh sales tax (SST) on construction services for a period of three months up to 30th June 2020, and continue to implement the levy of SST on property developers at the prescribed specific rates of Rs 50/square yard of the land and Rs 100/square foot of the constructed area. The exemption may be restricted to the services of the registered persons so that the extent of the economic activity of construction and the cost of exemption could be monitored, the note added.
The SRB has further pointed out the measure of exemption on construction services tariff would potentially cause a revenue loss of Rs 12 billion per annum, or Rs 3 billion for the current quarter of the financial year 2019-20.
In the event of allowing exemption of SST, the Sindh government may consider asking the federal government to compensate the Sindh exchequer for the loss of its revenue through a special additional grant.