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Here’s What You Need to Know About PM’s Package for Construction Industry.





Prime Minister Imran Khan has announced an incentive package for the construction industry in order to increase employment opportunities in the country as government tries to mitigate the economic impact of the coronavirus outbreak.

Announcing the package in Islamabad on Friday, the premier announced that the construction sector is being given the “status of industry”.
 

Firms relating to construction industries would reopen from April 14 to provide employments to people.

He said agriculture and construction are two major employing sectors in the country and a lot of people are associated with them.

 

The Prime Minister said a Construction Industry Development Board is also being set up to promote the construction industry.

Khan added that the main reason he was paying attention to the construction sector was that it generated jobs for daily wage workers, many of whom have lost their income due to the ongoing lockdown.

He said that in rural areas agriculture sector and in the urban areas construction and its related industries are being allowed, so that the people (especially daily wagers and low income individuals) can be provided employment opportunities.

The main incentives announced by the Prime Minister include:

  • Those who will invest in the industry this year will not be questioned about their source of income.
  • Fixed tax will be introduced in the construction sector and if the investor invests in construction projects under Naya Pakistan Housing Authority, 90% fixed tax will be removed and he will only pay 10% tax.
  • Withholding tax on construction will be lifted from all sectors, except steel and cement.
  • There will be no capital gain tax for a family that sells its house.
  • The tax rate will be fixed for the construction sector, and constructors will be charged tax per square foot or square yard.
  • A subsidy of Rs. 30 billion is being given to Naya Pakistan Housing project to spur the construction activities.
  • Sales tax are being reduced in coordination with the provinces, Punjab and Khyber-Pakhtunkhwa have agreed to reduce it to two percent
  • Construction Industry Development Board to be set up to support the sector.
  • Rate of tax be reduced in accordance with / proportionate to the increase in the valuation table
  • CGT holding period for constructed property be reduced from 4 years to 3 years (as was the case prior to 2019).
  • CGT holding period for real estate / plots may remain 8 years, however the rate of tax may be significantly reduced on sliding scale from fourth year onwards.
  • While declaring their net wealth, builders and developers will be eligible to take credit / impute income equal to 10 times of tax paid under this schedule

It is to be noted the investment made by any person from now till 30 June 2022 under the scheme on purchase of land and constructing any structure (house, commercial building etcetera) will be exempted from provisions of Section 111 of the Income Tax Ordinance 2001, which applies tax on the person concealed income.

Besides, construction of any structure on already owned land within this period or first purchase of newly constructed property within this period will also be exempted from the same clause of income tax.

The amount of such investment, within the given period, will be allowed to be incorporated in wealth statement.

More comprehensive details are expected to unveiled after issuance of FBR’s notification on the subject.

The Prime Minister stated that coronavirus has become a global challenge, however its impacts are different in Pakistan in comparison with the West. He said that Pakistan is facing dual challenge of corona as well as hunger.

He said lockdown will be successful only when it will be fully implemented across the country.

 
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