PkRevenue.com – The construction industry in Pakistan is making strides towards sustainability by adopting modern and eco-friendly construction materials, according to an official from the Institute of Architects Pakistan (IAP).
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Tax Rate on Construction Services in Islamabad Set at 15 Percent
Islamabad, July 7, 2023 – The Federal Board of Revenue (FBR) has recently released the tax rate for construction services rendered within the jurisdiction of Islamabad Capital Territory (ICT).
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FBR clarifies date extension to incentive package for construction industry
The Federal Board of Revenue (FBR) issued a clarification on Thursday, shedding light on the extension of the Prime Minister’s incentive package for the construction industry.
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MTO Karachi appoints focal person to facilitate construction sector
KARACHI: Medium Taxpayers Office (MTO) Karachi has appointed a focal person to facilitate construction industry for availing special incentive package announced by the prime minister.
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Tax incentive package: over 4,800 projects of construction industry to get registration
ISLAMABAD: Federal Board of Revenue (FBR) on Thursday said that it had received overwhelming response to construction industry package and over 4,800 projects have prepared drafts to get registration in the IRIS system.
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No question on source of investment for construction section: FBR
ISLAMABAD: Federal Board of Revenue (FBR) on Thursday highlighted tax relief package and said that source of investment for construction sector will not be investigated.
The government recently tax relief package for construction sector in order to restore economic activities. The package was also aimed to benefit 40 additional construction-linked industries. Besides, it was also aimed to generate more employment.
Highlighting the salient features, the FBR said that the tax reform package also allowed 90 percent tax reduction on investment in Naya Paksitan Housing Scheme.
Further, the package allowed fixed tax scheme with facility to pay tax liability in quarterly installments. Further, the incentive package offers easy and simple tax registration.
The FBR said that the government has granted concession in income tax and capital gain tax for builders and land developers.
Further, one time exemption of capital gain tax on sale/purchase of personal accommodation (up to 500 square yards house or 4000 square yards apartment).
The FBR said that the package extended exemption from requirement of withholding tax on building material and services (except steel and cement).
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Sales tax on services exempted on construction services
LAHORE: Punjab Revenue Authority (PRA) has exempted the sales tax on services rendered by construction industry till June 30, 2020.
The provincial authority issued a notification dated April 02, 2020 and allowed zero percent sales tax on services provided by construction sector for next three months.
However, this exemption from tax is available with condition that no input tax adjustment will be granted.
Previously, the industry was allowed reduced rate of five percent and one percent without input tax credit/adjustment in respect of government civil works and sixteen percent with input tax credit/adjustment for others.
The tax is payable within the provincial jurisdiction by construction services and services provided by contractors of building (including water supply, gas supply and sanitary works), roads and bridges, electrical and mechanical works (including air conditioning), horticultural works, multi-discipline works (including turn-key projects) and similar other works but, excluding:
(i) where the tax is otherwise paid by registered persons as property developers, builders or promoters for building construction; or
(ii) where the construction work is funded under an agreement of foreign grant-in-aid or involves construction of consular buildings; or
(iii) residential construction projects where the covered area does not exceed 10,000 square feet for a house and 20,000 square feet for an apartment except where construction services are provided to construct more than one house or more than one apartment building.
Explanation- Notwithstanding the rate of five percent fixed in column 4, the following further reduced rates shall be applicable:
(a) one per cent for all services specified at S.No.14 without input tax credit or adjustment to the extent of Government civil works including those of cantonment boards involved in the ongoing development schemes and projects launched during Financial Year 2016-17 and funded under the Annual Development Plan of the Punjab Government or funded through foreign loans where the negotiations were finalized after 1st of July 2016 or funded under Public Sector Development Program of the Federal Government or funded by the Cantonment Boards; and
(b) zero per cent for all services specified at S.No.14 without input tax credit/adjustment to the extent of Government civil works including those of cantonment boards involved in the ongoing development schemes and projects launched prior to Financial Year 2016-2017 and funded under the Annual Development Plan of the Punjab Government or funded through foreign loans where the negotiations were finalized as on 1st of July 2016 or funded under Public Sector Development Program of the Federal Government or funded by Cantonment Boards.
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Highlights of tax amnesty for construction sector
KARACHI: Federal Board of Revenue (FBR) to offer many incents through amendment to income tax law in order to comply with the announcement of the prime minister to grant tax amnesty to construction sector.
According to highlights released by Arif Habib Limited, the following incentives to be offered by the FBR:
1. Special tax provisions for builders and developers
2. Exemption from provisions of section 111 of the Income Tax Ordinance 2001, on construction activity
3. Rationalization of the Capital Gains Tax (CGT)
4. Valuation of Real Estate / Plots
5. Rationalization / Reduction in Sales Tax on Construction Material
6. Exemption of taxes on first house
7. Establishment of special taxes.
The analysts said that the domestic construction sector has faced enormous challenges in recent times due to changes in the regulatory environment (influenced by the ruling government, FATF etc.) including provision of money trail, assessment of income and increase in valuation of real estate.
Moreover, regulations such as CNIC requirement, restriction on sale of construction material to non-registered clients of over PKR 10mn etc.) also hindered construction activity.
The government has recognized the importance of the housing and construction sector and has addressed some of these concerns under the “Special Incentive Package for the Construction Industry” to revive the real estate sector.
The Government intends to dilute the impact of Covid-19 outbreak on domestic employment and has therefore introduced this package to mitigate its impact to some extent.
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PM announces tax incentive package for construction industry
ISLAMABAD: Prime Minister Imran Khan on Friday announced a comprehensive tax incentive package for construction industry and allowed opening of activities in this sector from April 14, 2020.
According to state-run media the prime minister announced the opening of construction sector from April 14 to help the country’s daily wagers and laborers, affected by continued lockdown due to COVID-19 outbreak, to earn their livelihoods.
Talking to media-persons, he said the government’s decision taken in coordination with the provinces, was also aimed at reviving economic activities in the country, badly hit by the situation arising out of the coronavirus outbreak.
The prime minister also announced various incentives for the construction sector including tax incentives, waivers and subsidies in the areas of sales tax, capital gain tax, withholding tax etc.
Giving details of the decisions, he said that those investing in the construction sector during the year 2020, would not be asked any queries about the source of their income.
Secondly, the Prime Minister said, the government had also decided to bring the construction sector in the fixed-tax regime under which the rate of tax on land would be levied on the basis of per square yard and per foot.
He, however, added that those investing in the prime minister’s housing programme would be given 90 percent tax rebate and they would be required to pay just 10 percent of the total calculated tax amount on their projects.
Imran Khan said that it has also been decided to waive-off withholding in cement and steel sectors.
Besides, he said, that in coordination with the provincial governments of Punjab, Khyber Pakhtoonkhwa and Sindh, it has also been decided to bring the sales tax in construction sector to 2 percent through consolidation of all taxes.
The Prime Minister further said that Capital Gain Tax on the sale of house was also being done away with.
He also announced Rs. 30 billion subsidy for Naya Pakistan Housing Programme, adding, further subsidy would be given on its progress.
The Prime Minister said the government has also decided to give construction sector the status of industry.
It has also been decided to establish the Construction Industry Development Board (CIDB) to help promote the construction industry in the country, he added.
The Prime Minister said all the decisions regarding the COVID-19 were being taken in coordination with the provinces. However, he added, any of the provinces could make changes as per their requirements.
He said since the Rs. 1200 billion’s stimulus package announced by the federal government to provide financial relief to the poor and daily-wagers in the wake of lockdown due to Coronavirus outbreak, the government had decided to open the construction sector.
The prime minister said with the agriculture sector, which was already open, providing jobs to people in villages, the opening of construction sector, the main source of employment in urban areas, was very much needed.
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ABAD hails tax incentives for construction industry
KARACHI: Mohsin Sheikhani, Chairman, Association of Builders and Developers of Pakistan (ABAD) Mohsin Sheikhani on Friday termed the incentives announced by Prime Minister Imran Khan as a historic package for the construction industry of Pakistan and this package will prove a turning point for the economy of Pakistan.
Commenting on incentives announced for construction sector, Mohsin Sheikhani said that ABAD was demanding incentives for the construction sector because more than 70 allied industries are depending on construction sector. He said that we are indebted to Prime Minister for reviving the construction industry.
He said that Prime Minister has announced that no question will be asked about investment in construction sector this year, Fix Tax Regime (FTR) for construction sector, 90 percent Fixed Tax will be waved off if invested in Naya Pakistan Housing Scheme, With Holding Taxes waved off, Federal Government will discuss with Provinces regarding sales tax reduction. Punjab and KPK have reduced sales tax to 2 percent, no Capital Gain Tax will be charged in case of Family house sell, Rs 30 Billion Subsidy for Naya Pakistan Housing Scheme, Status of Industry to Construction sector and much awaited Construction Industry Development Board to be established for development of Construction Industry.
We wholeheartedly grateful to the Prime Minister and also request him to announce an universal policy for approval of building plans throughout Pakistan so builders and developers can start construction as early as possible.