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pakistan
Friday Apr 17 2020
By
Web Desk

Cabinet approves ordinance for construction industry

By
Web Desk
Photo: File

ISLAMABAD: The federal cabinet on Friday approved an ordinance for the construction industry that will give special tax breaks to builders and land developers as business suffers due to the spread of the novel coronvirus in Pakistan and across the world.

The tax breaks will be applicable as soon as the ordinance is officially notified, sources told Geo News. Under the ordinance, those investing in land development schemes will not be asked about the sources or origin of their investments into the schemes.

Builders and developers who wish to take advantage of this scheme will have to deposit their investments into bank accounts by December 31. These builders and developers will then be bound to withdraw money from these accounts for the investments. 

Some of the important parts of the ordinance are listed below. Fixed tax regime for builders and developers would include:

  • Tax levied on per square foot / per square yard basis.
  • No withholding taxes on materials except for cement and steel.
  • No withholding taxes on services except those rendered by companies.
  • Builders and developers can take credit of income / profit from project up to ten times of tax paid.
  • For low cost housing projects, tax further reduced by 90%.
  • Applicable to new projects starting before 31st of December, 2020 and existing incomplete projects who opt for taxation under this scheme.
  • Both new and existing projects would have to get registered with FBR by filing a prescribed form on IRIS web portal.
  • Existing projects would self-declare the percentage of completion and shall pay fixed tax for the remaining project under the new fixed tax scheme.
  • Exemption of tax on dividends paid to shareholders by builders and developers opting for taxation under this scheme.

Also read: Shehbaz Sharif skips NAB hearing due to coronavirus

PM announces refunds of Rs100bn to businesses

Prime Minister Imran Khan had earlier this month said the government would announce a Rs100 billion package for the construction industry as it tries to keep the country afloat amid the coronavirus epidemic.

“We have decided we will give necessary incentives to the construction industry in order to provide job opportunities to people during this time of crisis,” PM Imran said while addressing a ceremony in Islamabad.

“We will support the industrial sector and give them incentives. The commerce ministry has also prepared a list of industries which can be reopened in the current situation,” he said.

The prime minister added that the construction of roads and infrastructure does not entail the danger of the spread of coronavirus. “We will develop the necessary SOPs to ensure the safety of workers."

Also read: PM Imran says Rs200bn earmarked for labourers in wake of coronavirus crisis

Sindh, Punjab extend virus lockdown but notify opening of select industries, businesses

Authorities in Sindh and Punjab on Tuesday issued notifications regarding the extension of a coronavirus lockdown but identified industries and businesses that would be permitted to resume operations.

The National Coordination Committee of the federal cabinet, that met earlier with Prime Minister Imran Khan in the chair, had decided to ease the virus lockdown and allow limited economic activity in the country to mitigate the impact of an economic crisis.

Various low-risk industries and sectors, including construction, chemical manufacturing, fertilizers, mining, glass manufacturing, e-commerce, and some others, were given the green light to re-open with safety protocols in place.