Salient features of amnesty scheme for housing, construction sector

Salient features of amnesty scheme for housing, construction sector

KARACHI: The government has announced an amnesty scheme for investors in order to boost housing/construction activities in the country at a faster pace.

Under this package sources of investment made to a housing project may not be asked if the investment made through a valid bank account by December 31, 2020 and projected identified for the investment is completed by September 2022.

According to official documents made available to PkRevenue.com following are the salient features of the scheme allowed under Section 100D of the Income Tax Ordinance, 2001:

Fixed Tax Regime for builders and developers

  • Tax liability computed on the basis of square feet/yard, to be paid in quarterly installments
  • New projects as well as existing incomplete project can opt for the scheme up to December 12, 2020
  • Projects to be registered with Federal Board of Revenue (FBR) online through IRS portal
  • Existing incomplete projects have to self declare the percentage of completion of project on the relevant date
  • Projects must be completed by September 30, 2022.

Exemptions/Benefits:

  • Exemption from requirement of withholding tax on purchase of building material except cement and steel
  • Exemption from requirement of withholding tax on acquisition of services relating to construction except those from companies
  • Permission to incorporate ten times of fixed tax paid as income in the books of accounts
  • 90 percent reduction in fixed tax liability for low cost housing
  • Dividend paid by builder or developer companies shall not be liable to tax and there shall be no withholding on the payment of these dividends

Exemption from Section 111 of the Income Tax Ordinance, 2001 for individuals:

  • Money is deposited in a new bank account up to December 31, 2020; or
  • Having ownership/title of the land invested as on April 17, 2020.

Exemption from Section 111 of the Income Tax Ordinance, 2001 for Company / Association of Persons (AOP):

  • By company/AOP if:
  • A single purpose company or AOP is registered between April 17, 2020 and December 31, 2020.
  • Money is invested through a crossed banking instrument up to December 31, 2020; or
  • Land owned by the partner/shareholder is transferred to the company / AOP up to December 12, 2020.
  • Money or land invested is utilized in the project
  • Project is completed by September 30, 2022
  • In case of builder, grey structure is completed (top roof as per plan is laid)
  • In case of a developer:
  • Landscape is completed and all roads are laid up to sub-grade level
  • At least 50 percent plots have been sold and at least 40 percent sale receipts have been received.

Exemption from Section 111 on purchase of:

  • Plot, if:
  • Plot is purchased before December 31, 2020 (complete payment is made through banking channel before December 31, 2020)
  • Construction on such plot is started before December 31, 2020 and completed before September 30, 2022
  • Building, if:
  • Purchase is from a registered project and buyer is the first purchaser of the building
  • Purchase is made before September 30, 2022 (complete payment is made through banking channel)

Exemption from Section 111 is not available for:

  • Public office holders
  • Public companies, REITs and companies whose income is exempt
  • Proceeds of crime.

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