Islamabad: The government is working on a fixed income tax scheme for small builders and services providers under the amended Finance Bill 2022, according to news published on June 26.
Read: Finance Bill 2022: Govt mulls ending tax amnesty scheme for industries
A tax official informed that the details of the scheme are not yet finalised because of the shortage of time for implementation. However, the proposed plan will focus on the fixed scheme for small shopkeepers. As per the details, the plan will have three categories and the final rates will be decided after discussion with the finance minister.
- The first category will be for the cities Lahore, Karachi, and Islamabad – which will have a higher rate of PKR 1,000 per sq. ft
- The second category will be for Peshawar, Abbottabad, Multan, Faisalabad, Rawalpindi, Sahiwal, and Gujranwala, which will be charged a lower rate of PKR 300 per sq. ft
- The third category will be for the remaining cities and have the rate of PKR 150 per sq. ft
Read: PM imposes ‘Super Tax’ on specified industries to generate revenue
Moreover, the small builder is defined as an individual who has four residential plots and two commercial plots for construction in a year. It was disclosed that the builders constructed houses for sale but were not included in the tax net. Further, it was mentioned that six types of rates will be proposed for each category in two groups.
Reportedly, the Federal Board of Revenue (FBR) will inform the payment method decided for the builders. The tax official revealed that the government will introduce fixed tax rates ranging between PKR 20,000 and PKR 100,000 per annum. The fixed tax rate will depend on the nature of professional services and their potential.
Read: Senate committee turns down FBR’s tax increase on real estate
According to the details, the sectors that will be brought under the tax net will be housing society developers, real estate brokers, builders, car dealers, salons, chartered accountants, lawyers, doctors, restaurants, engineers, and other service providers. The tax official mentioned that the fixed tax scheme will be implemented either in August or July.