Cabinet approves ordinance to provide incentives for construction industry

• As per the ordinance, withholding tax has been exempted from construction material.
• 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 reduced advance tax on auction of properties to five percent from 10 percent.

(Karachi) The cabinet has approved an ordinance which aims to provide incentives for the construction industry, media reported on Friday. The package was announced by Prime Minister Imran Khan earlier to increase employment opportunities in the country in wake of the coronavirus pandemic.

As part of the ordinance, withholding tax has been exempted from construction material and provision of services except for cement and steel. Besides, a fixed tax regime has been introduced for builders and developers.

For low cost houses to be constructed under Naya Pakistan Housing Authority, tax has been reduced by 90 percent.

Similarly, 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.

In addition, the incentive package will be applicable for the projects to be initiated before December 30, 2020, and  for all the ongoing incomplete schemes. According to the ordinance, it will be mandatory for builders and developers  to get their projects registered with Federal Board of Revenue through IRIS web portal.

The government has also reduced advance tax on auction of properties to five percent from 10 percent while sales tax on construction services in Islamabad 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.