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CONSTRUCTION RELIEF PACKAGE

HIGHLIGHTS

DISCLAIMER
Please note that the information shared in this document is only for the purpose
of understanding and simplification. For actual requirements of law, please refer
to the Tax Laws (Amendment) Ordinance, 2020. The organization and
Government cannot be held responsible for any Information shared in this
document. Further the given information cannot be referred to in the court of law.

  •  The Government has announced incentive package for the builders and developers to promote the construction industry. The salient features of the package              and  incentives available for the builders and developers are as follows
1.  Fixed tax regime for builders and developers
       i.  Tax liability to be computed on the basis of square feet/yard, to be paid in  quarterly installments (Rs. 50/sq foot and Rs. 100/ sq yard)
      ii. New projects as well as existing incomplete projects can opt for the scheme  up to 31-Dec-2020
      •  Projects to be registered with FBR online through IRIS portal
      •  Existing incomplete projects have to self-declare the percentage of completion of project on the relevant date
      • Projects must be completed by 30-September-2022
     iii. Exemption from requirement of withholding tax on purchase of building material except cement and steel
     iv. Exemption from requirement of withholding tax on acquisition of services relating to construction except those from companies
      v. Permission to incorporate ten times of fixed tax paid as income in the books of accounts
      vi. 90% reduction in fixed tax liability for low cost housing
     vii. 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
 2.  Exemption from section 111 on investment made in new construction projects
      i. Capital investment (money/land) made by a company/AOP in a new project shall not be probed for its source if the following conditions are met:
     • A single purpose company or AOP is registered between 17-April2020 and 31-December-2020
     • Money is invested through a crossed banking instrument up to 31- December-2020; or
     • Land owned by the partner/shareholder is transferred to the Company/AOP up to 31-December-2020
      ii. Money or Land invested is utilized in the project
      iii. Project is completed by 30-September-2022
      iv. In case of builder:
      • grey structure is completed (top roof as per plan is laid)
      v. In case of developer,
      • Landscaping is completed and all roads are laid up to sub-grade level
      • At least 50% plots have been sold and at least 40% sale receipts have been received
3.  Exemption from Section 111 on purchase of Plot,
      i. If plot, if:
     • Plot is purchased before 31.12.2020 (complete payment is made through banking channel before 31.12.2020)
     • Construction on such plot is started before 31.12.2020 and completed before the 30.09.2022
     ii. Building, if:
     •   Purchase is from a registered project and buyer is the first purchaser of the building
     •   Purchase is made before 30.09.2022 (Complete payment is made
      through banking channel)
4.   Exemption from section 111 is not available for:
      i. Public office holders
      ii. Public companies, REITs and companies whose income is exempt
      iii.   Proceeds of crime
5.   One-time exemption of tax on capital gain on sale of personal accommodation of
      size upto 500 sq yard house or 4000 sq feet apartments.
6.   Construction sector given the status of an industrial undertaking for import of
      plant and machinery.
7.   Advance tax on auction of immoveable property reduced from 10% to 5%.
8.   CVT on immoveable property and shares has been withdrawn in ICT.

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