A new amendment is made in the income tax ordinance 2001, and give new incentives to the construction sector of Pakistan. The main reason for doing this is to attract more investment for this particular sector in Pakistan.
One of the major incentives given to this sector is if anyone invests in this sector, there is no need to disclose the source of income for this investment. (except income from money laundering or from criminal proceedings).
This sector is also given an industry status, which will allow this sector to enjoy incentives on the import of plant and machinery like other industries in the country.
Another good news for this sector is that the fixed tax rates will be applied by the government to this sector per square feet/yard basis.
Withholding tax is also removed on all materials related to construction except cement and steel. Tax on services will also be removed and the facility of getting ten times credit of income and profits on which the tax is paid.
One time capital gains tax can be claimed for the residential house of personal use if there are measured 500 sq yards and in the case of apartments 4000 square feet is the limit.
On the sales of property, the advance tax has also been reduced from 10% to 5%.
Naya Pakistan Housing Scheme
The tax in Naya Pakistan housing scheme is reduced by 90% for the low cost project those would be started before December, 2020. Dividend paid to shareholders would also be free of tax.
Unexplained income source will not be asked if the money is deposited into a new bank account for the investments in the purchasing of land before decemeber 2020. The exclusion from the unexplained income sources will be provided for the projects commencing from December 2020. There is a specific requirement in this new amendment in the tax regime that the project is only considered complete if the developer completes the grey structure till September 2022. This exemption can also be claimed if fifty percent of the plots have been booked by the developer and forty percent of the payment have been received by September 2022.