Lahore: The federal government on Friday proposed several relief measures for the country’s real estate and construction sectors as well as allied industries during its Budget 2020-21 announcement; with an aim to increase revenues and provide jobs to labourers and daily wagers, a news source reported.
Reduction in CGT
In his budget speech, Federal Minister for Industries and Production Hammad Azhar said that the government had proposed the removal of the bifurcation concept of constructed property and plots to determine properties’ holding period for collection of capital gains tax (CGT). The holding period for CGT imposition has now been reduced to 4 years from the previous condition of 8 years, where the CGT ratio on disposal of property is also being reduced, he added.
The government has proposed 7.5% CGT on an immovable property sold within two years of its purchase, 5% on an immovable property sold within three years of its purchase, 2.5% on an immovable property sold within four years of its purchase and 0% for immovable properties sold after four years of their initial purchase.
Azhar announced that the government had devised a new taxation system for builders to offer relief in taxes. He further said that that builders would be required to pay PKR 250 per square feet on units sold in commercial and residential buildings in Islamabad, Lahore and Karachi, whereas builders engaged in the sale of property units in Peshawar, Rawalpindi, Hyderabad, Multan, Faisalabad, Gujranwala, Sukkur and Sahiwal will be required to pay PKR 230 per square feet.
This levy is part of the fixed tax regime for builders and developers promulgated via the Tax Law Ordinance 2020 announced in April to offer relief to the construction industry; adding that the relief aims to facilitate builders and developers registered with the Federal Board of Revenue (FBR).
The government has further proposed to reduce Federal Excise Duty on cement to PKR 1.75 kg per kilo from the previous duty of PKR 2 per kilo. This initiative, as per the federal minister, is expected to reduce price of a cement bag by PKR 25, while news source claim a different figure on expected drop in per bag price.
In addition, the government is reducing regulatory duty n steel and hot-rolled iron coils from 11% and 6% respectively, which previously was 17.5% and 11.5% in the same order.
What is the status of CVT in Punjab which was previously reduce to 1% from 5% till 30june…what will be the status from 1st July onwards.