Islamabad: The government has prepared the draft for the Tax Laws (Amendment) Ordinance 2020 — under which all parts of the country have been categorised under three tax slab categories, according to news sources. As per the publication, President Alvi is expected to promulgate this ordinance shortly and with immediate effect; with the above tax distribution having been planned in a bid to offer tax benefits and support to the construction sector.
Under the amended ordinance, the Category-I includes three major metropolitans; Karachi, Lahore and Islamabad; the Category-II includes Abbottabad, Faisalabad, Gujranwala, Hyderabad, Multan, Mardan, Peshawar, Rawalpindi, Sahiwal, Sukkur, and Quetta; while the Category-III encompasses the remaining urban centres in the country.
What is the fixed tax rate for properties in Category-I cities (Karachi, Lahore and Islamabad)?
For Category-I, the fixed tax rate for commercial, residential (apartments) and industrial buildings and plots have been finalised at PKR 250 per sq ft (maximum), while the rates for Category-III are PKR 50 per sq ft (minimum).
The new ordinance will benefit builders and developers from the first day of its promulgation; however, they will be bound to launch construction work on their projects by December 31, and complete them by September 30, 2022. The builders and developers are further required to get registered under the Securities and Exchange Commission of Pakistan (SECP), and they also wont be allowed to change the names of shareholders and builders without the commission’s approval once registered.
Additionally, the new Pakistan Housing and Development Authority will also be constituted under the new ordinance, and the Finance Act 1989 and the Income Tax Ordinance 2001 is expected to be amended further as a result.