Islamabad: The Federal Board of Revenue (FBR) on Monday announced that developers who chose to opt for its Fixed Tax Scheme would not be required to pay any withholding tax on the purchase of building materials, a news source reported.
FBR officials revealed the said information while answering queries of developers and builders regarding the Fixed Tax Scheme. They highlighted that buyers registered under the scheme had been exempted from paying withholding tax on building materials except cement and steel. They added that they were also not liable to pay it on services of electrification, shuttering, plumbing, and other similar ones except on those provided by companies.
The FBR officials informed the developers and builders that the fixed tax rate would come down by 90% in case of a low-cost housing project developed or approved by the Naya Pakistan Housing & Development Authority or under the Ehsaas Programme. They also revealed that in case of mixed-use projects i.e. commercial and residential; the rates specified for each category would be applicable.
The FBR officials also answered several other queries of developers and builders with regard to the Fixed Tax Scheme. These included clarifications stating that those registered under the scheme were:
- eligible for tax credit from tax collected under sections 236A & 236K from such builders or developers following the commencement of the Tax Laws (Amendment) Ordinance 2020 from April 17 onwards upon purchase of immoveable property utilised in a project registered under the scheme
- liable to pay an advance tax equal to one-fourth of the tax liability for the year calculated under the scheme in four equal instalments
- allowed to incorporate profits and gains resultant from such projects up to 10 times of the tax paid under the scheme if they opted for taxation under section 100D of the ordinance