{"id":104239,"date":"2021-01-05T11:41:37","date_gmt":"2021-01-05T11:41:37","guid":{"rendered":"https:\/\/www.zameen.com\/blog\/?p=104239"},"modified":"2021-01-25T13:46:59","modified_gmt":"2021-01-25T13:46:59","slug":"construction-relief-package","status":"publish","type":"post","link":"https:\/\/www.zameen.com\/blog\/construction-relief-package.html","title":{"rendered":"How Will PM’s Construction Relief Package Benefit Pakistan\u2019s Real Estate in 2021?"},"content":{"rendered":"\n

Update (Jan 25, 2021):<\/strong> The President of Pakistan has recently promulgated the Tax Amendment Ordinance 2021 to facilitate the construction sector of the country.\u00a0 Made effective from January 1st, 2021, this newly introduced ordinance has extended the deadline for availing the government’s special construction relief package from 31st December 2020 till 30th June 2021.<\/em><\/p>\n\n\n\n

Now builders and developers can easily get their projects registered under this tax amnesty scheme, which provides them immunity from disclosing their sources of income as well as availing the fixed tax regime. The deadline for the completion of projects is now 30th September 2022, instead of 30th September 2023. Moreover, real estate investors can now enjoy the immunity to disclose their funding sources as well as the facility of fixed tax regime due to the extended deadline from 30th September 2022 till 31st March 2023.<\/em><\/p>\n\n\n\n

\n\n\n\n

Like all the other fields, the impact of the COVID-19 pandemic has also been deeply felt by the construction sector in Pakistan. In the first quarter of the year 2020, life came to a complete halt as soon as the pandemic hit the nation. Keeping in view the contagious nature of the coronavirus, strict lockdowns were imposed across the country by the authorities and there was also a complete ban on construction activities for almost a month. <\/p>\n\n\n\n

The construction activities were finally resumed on April 14, 2020. In order to cover for the losses that investors and stakeholders have suffered during the coronavirus lockdown, the Prime Minister of Pakistan Imran Khan announced a comprehensive construction relief package<\/a>. It\u2019s basically an amnesty scheme for the construction sector, designed to sustain the economic growth of the industry. <\/p>\n\n\n\n

As per the expectations, this incentive package played a very significant role in boosting construction activities across the country. The expiration date of PM\u2019s construction relief package was due on December 31, 2020, but due to its phenomenal success, it has been extended till December 31, 2021. In fact, Prime Minister Imran Khan has introduced more incentives for the construction relief package in 2021. <\/p>\n\n\n\n

So, let\u2019s take a look at some of the key highlights in this regard and how these developments will benefit the economy and real estate market of Pakistan.<\/p>\n\n\n\n

Tax Exemptions for Low-cost Housing Developers and Builders<\/h2>\n\n\n\n

It is often termed as the \u2018historic\u2019 relief package because it is the very first time in the history of Pakistan that such incentives were offered to the construction industry. The developers and builders of the low-cost housing projects across the country now enjoy a 90% tax exemption. <\/p>\n\n\n\n

They have also been exempted from paying the withholding tax on the purchases made for different types of construction materials and other related services. These incentives also directly benefit the investors of the Naya Pakistan Housing Scheme, speeding up the development of the project. On a side note, if you want to get all the latest updates on Naya Pakistan Housing Programme (NPHP)<\/a>, read this blog. <\/p>\n\n\n\n

No More Capital Gains Tax (CGT)<\/h2>\n\n\n\n
\"No
The practice of collecting 5% to 20% Capital Gains Tax (CGT) on property sale has recently been abandoned by the government<\/figcaption><\/figure>\n\n\n\n

Previously, the government used to charge around 5% to 20% Capital Gains Tax (CGT) on the sale of houses and plots. After the introduction of this tax amnesty scheme for the construction sector, the practice of collecting CGT has been abandoned. This will allow people to easily sell their properties during this pandemic situation. <\/p>\n\n\n\n

The concerned authorities have also halved the advance tax percentage from 10% to 5%, which is applicable to the sales of immovable properties across the country. Along with these extremely noteworthy and beneficial incentives, a significant reduction in the sales tax has also been made in collaboration with the provincial governments. <\/p>\n\n\n\n

FBR and Construction Relief Package in 2021: Investors Continue to Enjoy Exemption from Disclosing Income Sources<\/h2>\n\n\n\n

Taking around 163 projects onboard worth PKR 136 billion and collaborating with the Federal Board of Revenue (FBR), the government announced the fixed tax scheme under the banner of the construction relief package. According to it, investors of the projects registered with FBR have been given exemption from disclosing their sources of income. <\/p>\n\n\n\n

The two of the major projects of Zameen Developments including Zameen Aurum<\/a> and Mall 35<\/a> have also significantly taken part in this tax amnesty scheme to benefit the investors. Such moves will evidently contribute to the progress of the property market of Pakistan in 2021, strengthening its position for many years to come.  We have covered a detailed news story on this historic relief package for the construction industry<\/a> that you may also like reading.<\/p>\n\n\n\n

PM\u2019s Newly Introduced Incentives in the Tax Amnesty Scheme for the Construction Sector<\/h2>\n\n\n\n
\"PM\u2019s
The additional incentives for the relief package are PM’s ‘New Year gift’ to the construction industry<\/figcaption><\/figure>\n\n\n\n

Announcing additional incentives for the relief package, Prime Minister Imran Khan called it a \u2018New Year gift\u2019 for the construction sector. Here are some of the most noteworthy highlights of this major development.<\/p>\n\n\n\n