PM Imran Khan Announces Strong Incentives for Construction Sector
Amidst the chaos of coronavirus and to mitigate its impact on economic sector, the Prime Minister Pakistan Imran Khan has announced an incentive package for the construction sector to increase employment opportunities throughout the country.
Moreover, the premier announced that the construction sector is being given the “status of industry” from now. With this status, he also said a Construction Development Board is also being set up to promote the construction industry. He emphasized that agriculture and construction are two major employing sectors in the country and gazillions of people are associated with them both.
He also announced that firms related to the construction industries would reopen from April 14 to start providing employment to masses. It is emphasized that the reason to highlight and pay attention to the construction sector was that it previously generated jobs for the daily wagers and almost all of them have lost their income due to the on-going lockdown in the country due to COVID-19.
Considering all the pointers, the government has decided to allow the agriculture sector in rural areas and the construction sector in urban areas to be functional so that people can be provided employment opportunities.
Major incentives that were announced by the Prime Minister Imran Khan include:
- People investing in this industry this year will not be questioned about their source of income.
- Fixed tax regime will be introduced in the construction sector.
- If the investor invests in construction projects under Naya Pakistan Housing Program, 90% fixed tax will be slashed and he will only have to pay 10% tax.
- Withholding tax imposition on construction will be lifted from all sectors, except steel and cement.
- No capital gain tax will be imposed on people, who sell their homes.
- Tax rates will be fixed for construction sector on per square foot or square yard basis.
- A subsidy of 30 billion PKR is given to Naya Pakistan Housing Program to spur the construction activities.
- Construction Industry Development Board to be set up to support the sector.
- 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 notable that the investment made by any person from now till 30 June 2022 under the scheme on purchase of land and constructing any structure 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 be unveiled after the release of FBR’s notification on the subject.