Lahore: The Federal Board of Revenue (FBR), via a print publication on Monday (July 13), shared the details regarding the ‘historic’ relief package announced for the construction industry — with the move aimed at attracting investment, promoting construction activity in the sector, and creating employment opportunities for daily wagers.
The FBR termed Prime Minister Imran Khan’s initiative as the ‘biggest relief package in history’. Under this development, the federal government has introduced several features. These include the following:
Fixed Tax Regime for Real Estate Developers and Builders
- The government has announced a 90% tax exemption for real estate developers and builders involved in the construction of low-cost housing projects
- Builders and Developers are being exempted from Withholding Tax on the provision of construction related services and the purchase of construction material
Construction Sector Gets Industry Status
This essentially means that the facilities extended by the government to all the sectors that have been granted industry status (in terms of imports of machinery and related items) will now be available for the construction industry as well.
Exemption from CGT
The government has provided a one-time relief on Capital Gains Tax (CGT) to the owners of self-occupied houses and flats measuring 500 square yard and 4,000 square feet respectively.
No Questioning on Income Sources
Investors who will purchase plots and other types of properties, and invest in newly launched construction projects will not be interrogated on their sources of income invested in the real estate sector. While the FBR hasn’t shared any details on the deadline to avail this offer, Prime Minister Imran Khan announced that the exemption is valid till December 31.
50% Reduction in Advance Tax
The government has halved the percentage of advance tax applicable on the sale of immovable properties from 10% to 5%.
- Banks have reserved PKR 330 billion (5% of their portfolio) for house financing
- PKR 300,000 subsidy on loans for first 100,000 applicants of the Naya Pakistan Housing Program (NPHP)
- Only 5% markup on loans sought for the construction of 5-marla low-cost houses under NPHP developments
- Only 7% markup on loans secured for construction of 7 marla NPHP houses
- Establishment of web portals to ensure speedy processing of NOC issuance for real estate projects