by ZeeShan Kahloon 
After a struggling time of more than two years, the real estate and construction sector has now breathe relieving news. Prime Minister Imran Khan proposed an investment package for the construction industry to increase the country’s job prospects as government attempts to reduce the economic effect of coronavirus outbreak.
It is kind of open-ended amnesty scheme that will be applicable up to December of 2020 or can exceed. The incentives will be implemented till July of 2020.
Major Incentives In PM’s Package For Real Estate And Construction Sector
The construction and builder sector is credited with a solemn industry status. The main incentives include:
- Anyone who will invest in this year’s industry won’t be questioned about their source of revenue.
- In the construction sector, a fixed tax will be imposed, and if the investor invests in construction projects under the Naya Pakistan Housing Authority, a fixed tax of 90 percent will be eliminated and only 10 percent will be paid.
- The construction withholding tax would be imposed from all industries except steel and cement.
- For a family that sells its house there would be no capital gain fee.
- The tax rate for the building sector will be set, and the tax will be paid to the builders per square foot or square yard.
- Naya Pakistan Housing initiative earns a subsidy of PKR 30 billion to encourage construction operations.
- In collaboration with the provinces, sales tax is being reduced, Punjab and Khyber-Pakhtunkhwa have agreed to cut it to two per cent. Construction Industry Development Board formed to support the sector.
- The rate of tax shall be reduced from 4 years to 3 years (as was the case before 2019) in accordance with / proportionate to the change in the valuation table / CGT holding period for constructed land.
- CGT holding period for real estate / plots will remain 8 years, but from the fourth year on the sliding scale the tax rate will be substantially reduced.
- Builders and investors will be entitled to take credit / impute profits equal to 10 times tax payable under this schedule when reporting their net worth.
- 20 year mortgage allowance for long-term commitment.
Note For Businesses Related To Construction Industry
It is a good way to turn black money into white money and utilize it for profitable purposes. From April 14, companies relating to the construction industry will reopen and provide people with jobs.
“Agriculture and construction are two big employment sectors in the country and they involve a lot of people.”
PM Imran
The Prime Minister said a Council for the Construction Industry Development Board is also being formed to promote the construction industry.
PM added that the main reason he paid attention to the construction sector was because it provided employment for the regular wage workers, many of whom lost their income due to the continuing lockdown. He said that agriculture sector in rural areas and construction in urban areas and their associated industries are permitted so that people (especially daily wagers and low-income individuals) can be given job opportunities.
Implementation of PM’s Package
It should be noted that any person’s expenditure from now until 30 June 2022 under the land purchase scheme and the construction of any structure (house, commercial building, etc.) would be excluded from the provisions of Section 111 of the Income Tax Ordinance 2001, which imposes tax on the person’s secret income.
Furthermore, building of any house on already owned land during this time or first acquisition of newly constructed property during this time would also be exempted from the same income tax provision.
The amount of such investment will be allowed to be included in the wealth statement within the specified period. More detailed information is expected to unveil after FBR’s notification on the subject is released.
The Prime Minister said coronavirus has become a global threat, but its impacts in Pakistan are different compared to the West. PM said Pakistan faces both dual corona threat and hunger. He said lockdown would only be effective if it is enforced in full across the world.
The Prime Minister and the respective authorities in consideration of the loss of real estate sector due to Coronavirus outbreak make the aforementioned policy changes.
