Construction industry: Government mulling returning to final tax regime

The federal government is considering to return to the final tax regime from the existing normal tax regime in order to facilitate the construction industry, said sources.
They said a proposal is under study to reduce withholding income tax rate to 5% and withdrawal of super tax imposed on the industry which has already been stayed by the higher courts through a restraining order.
According to the sources, the government was also mulling over uniform sales tax rate of 13% in all provinces instead of the present rates of 13%, 15%, and 16%, respectively.
It may be noted that Prime Minister Imran Khan had pointed out in his public addresses that the government would soon come up with tax relief to the construction industry to boost economic recovery in the country.
They said a uniform sales tax at the level of provinces on construction services is also under consideration. It may be noted that the Punjab Revenue Authority deducts 100% sales tax without leaving room for adjustment of input sales tax.
The sources said this practice on the part of PRA is contrary to what is being carried out at the level of Federal Board of Revenue, Sindh Revenue Board, Khyber Pakhtunkhwa Revenue Authority and Balochistan Revenue Authority where the authorities withhold only 20%.
They said most of the contractors, operating on sites, are unable to withhold taxes on rural and far-flung areas and cannot make payment through cross cheque. Therefore, a proposal is also under consideration of allowing the contractors to make 50% of payments through cash and without withholding the income tax.