20/04/2020
Construction Package Relief by Government of Pakistan
• Construction Sector has been included in the list of industrial undertaking from 01 May 2020.
• Special provisions relating to builders and developers has been added by inserting 11th Schedule, which is applicable to:
a new project to be completed by the 30th day of September, 2022
an incomplete existing project to be completed by the 30th day of September, 2022.
Subject to that any income, profits and gains of a builder or developer of an incomplete existing project earned up to tax year 2019 shall be subject to the provisions of the Ordinance as were in force prior to the commencement of the Tax Laws (Amendment) Ordinance, 2020 and any income other than income, profits and gains shall be subject to tax as per the provisions of the Ordinance.
• Source of Income shall not be asked from an Individual or from Company/AOP (if the person is making investment through Company/AOP) on investment of Builder or Developer subject to following Conditions:
Money shall be deposited in newly opened Bank Account of Individual/AOP/Company on or before 31 December 2020
If in the shape of land, that land shall be in the name of that individual or in case of AOP/Company it shall be transferred in the name of Company/AOP on or before 31 December 2020.
If the investment is made by a person in a project through an AOP/Company, it shall be registered after the date of commencement of the Tax Laws (Amendment) Ordinance, 2020.
• Source of Income shall also not to be asked from the first purchaser of Building or Unit of Building if full payment is made through a crossed banking instrument to the builder on or before the 30th day of September, 2022, in case the purchase is from a new project and in case the purchase is from an existing incomplete project from the date of registration of the project with the Board under this section and ending on the 30th day of September, 2022.
• Provisions of Sections 113 and 113C shall not apply on the turnover, income, profits and gains of a builder or developer from a project.
• Dividend income paid to a person by a builder or developer being a company out of the profits and gains derived from a project shall be exempt from tax.
• Capital Gains has been exempted from the sale of constructed residential property if
Residential property was being used for the purpose of personal accommodation by the resident individual, his spouse or dependents and for which any of the utility bills is issued in the name of such individual;
Land area of the property does not exceed 500 Sq yards in case of a house and 4000 square feet in case of a flat; and
Any such exemption has not been availed previously.
• Tax payable on the income, profits and gains of projects of ‘low cost housing’ developed or approved by Naya Pakistan Housing and Development Authority (NAPHDA) or under the Ehsaas Programme shall be reduced by 90%.
• The provisions of section 153 shall not apply to builders and developers on
o the purchase of building material except steel and cement
o services of plumbing, electrification, shuttering and other similar services other than those provided by companies.
• RATE AND COMPUTATION OF TAX LIABILITY
