Lahore: In order to operationalise its announced construction sector incentive package, the government is looking to promulgate an amendment ordinance to make the necessary changes in the Income Tax Ordinance 2001 (and other relevant laws); the draft for which has been prepared — a news source reported. As per the publication, the ordinance is expected to be officiated today.
Read: Construction sector gets ‘historic’ relief package; CGT, source of income conditions revoked
According to the details available, the 11th Schedule is proposed to be added to the income tax ordinance that will determine the new rates at which the income and taxes payable by the builders will be determined. It will also introduce the amendment that will exempt investors, builders and developers from revealing their source of investment in the construction sector for a certain period of time. This exemption will also extend to the people who are the first-purchasers of a newly constructed building — if the purchase is made before September 30, 2022.
For the purpose of calculation of tax liability on a project-by-project basis, the country has been divided into three categories. Karachi, Lahore, and Islamabad have been placed in one category, with the highest rates. Hyderabad, Sukkur, Multan, Faisalabad, Rawalpindi, Gujranwala, Sahiwal, Peshawar, Mardan, Abbottabad, and Quetta have been placed in the second category with a specified rate as well. The third category will comprise of all the other urban areas in the country.
The tax rates will also differ depending on whether the company is categorised as builders or developers.
The provisions of these amendment ordinances will apply to the projects started between time of the promulgation of the ordinance and December 31, 2020, and will be finished on or before September 30, 2022.
Read: Will the Prime Minister’s Construction-sector Package Work?
Additionally, the ordinance will exempt the sale of personal homes from the Capital Gains Tax — only once for a family, and provided that the house is not larger than 500 sq yd or the flat is not larger than 4,000 sq ft.
The ordinance will also lift the withholding tax on construction materials as had been announced by the Prime Minister in his construction package speech.