The Finance Bill 2023 aims to boost the construction industry by introducing a tax credit for the construction of new houses.
A new section, 65I, has been added to the Income Tax Ordinance, 2001 to facilitate this provision.
READ MORE: Tax Exemptions Introduced for Qualified Investments under Foreign Investment Act
Under the proposed amendment:
1. For the tax years 2024 to 2026, individuals engaging in the construction of a new house will be eligible for a tax credit, provided that the construction is completed within the same tax year, and a completion certificate is furnished along with the tax return.
READ MORE: Finance Bill 2023 Introduces Additional Tax on Unexpected Income, Profits, and Gains
2. The amount of tax credit allowed under subsection (1) will be the lesser of: a. Ten percent of the tax assessed to the individual for the respective tax year. b. One million rupees.
3. The term “new house” refers to a residential house for which the layout plan has been approved by the relevant authority on or after July 1, 2023.
The introduction of this tax credit aims to promote the construction industry by encouraging individuals to invest in the construction of new houses. By providing a tax incentive, the government aims to stimulate economic activity in the real estate sector and create opportunities for employment and economic growth.
READ MORE: FBR Empowered to Recover Outstanding Liabilities under Other Laws
Individuals interested in availing this tax credit should ensure that the construction of their new house is completed within the same tax year and obtain the necessary completion certificate. This certificate will serve as evidence when filing their tax return to claim the tax credit.
It is important for individuals to consult with tax professionals or legal experts to understand the specific requirements and procedures for claiming the tax credit. Proper documentation and compliance with the regulations will ensure a smooth process and maximize the benefits provided by this tax incentive.
READ MORE: FBR Exempts Foreign Inflows Up To $100,000 From Scrutiny
The government anticipates that this tax credit will not only benefit individuals constructing new houses but will also have a positive impact on the overall economy, particularly the construction sector, by stimulating investment and contributing to the growth of the housing market.
