Islamabad: The government has finalised a proposal in its bid to eliminate tax liabilities of the developers and builders by 90% on their income generated from the low-cost housing project development, being carried out under the supervision of Naya Pakistan Housing Authority (NPHA) – according to news sources.
According to the rules drafted by the Federal Board of Revenue (FBR); major concessions to developers and builders will be offered on account of the source of equity investment, exemption form the production of record and exemption from the income tax computer ballot audit.
These rules will be titled ‘Builders and Developers Special Procedures Rules 2019’, and are expected to be unveiled soon by the taxation authority. These rules have been drafted in accordance with Section 99 C of the Income Tax Ordinance 2001 that allows the department to notify ‘special procedures for certain persons’.
In another related development, the government is also considering to allow builders to invest in the construction sector without having the need to declare their source of income. This is a major concession that the government is considering in its efforts to create an investment window for the ailing construction sector.
However, the FBR will have to amend relevant sections of Income Tax Ordinance 2001 to implement the specialised regime for unexplained income, computer ballot audit and record production.
The draft of special rules will be published on the FBR’s website in two week’s time frame to invite comments of the stakeholders, prior to the enforcement. The draft rule states that the builders and developers who avail themselves of the special schemes will not be entitled to claim adjustments in withholding taxes. Also, income subject of these rules for building and development companies will be treated as a separate class of income.
The government also plans to ask the builders are developers in possession of the national tax number (NTN) – but have not filed their returns for the last five years – to avail this special scheme. They will be allowed to file their taxes at any FBR field office.
One condition that has been imposed on those interested in availing special scheme is that they will be required to provide FBR with a NESPAK certificate. This certificate shall hold details about the covered area of the project, clearly communicated nature of construction, in case the project encompasses 5,000 sq ft or above area.
FBR is also planning to bar its officers from visiting project sites or take any legal action without the approval of the committee – constituted by FBR for this purpose.
The tax rebate is only for the builders and developers working on low-cost housing projects.
Hazafa reveres the art of writing and has been turned into a property enthusiast by profession. Her daily survival kit includes; tea, coffee, keyboard and paperbacks.
