Fixed tax regime for construction industry: PM extends relief period till Dec 31

ISLAMABAD: Prime Minister Imran Khan on Thursday announced extension in tax amnesty scheme for the construction sector till June 2021, and fixed tax regime to December 31, 2021, while terming the decision as a “New Year’s gift” for the construction industry.

Unconfirmed reports claim that the International Monetary Fund (IMF) has agreed to the extension in view of the second wave of coronavirus.

The prime minister, in his televised address to the nation, said that on the demand of the construction industry; (i) fixed tax regime has been extended till December 31, 2021, and; (ii) exemption under Section-111 from disclosing the source of income of investment has been extended till June 30, 2021; (iii) projects completion date of September 30, 2023 has been extended by a year more, and; (iv) exemption for disclosing the source of investment for buyers has been extended till March 31, 2023.

The prime minister said the construction industry was facing an issue because when the package was announced the Covid-19 was at its peak in the country and consequently people took three to four months to absorb the package.

“There was to demand the industry with respect to extension in the package,” he added.

The prime minister said that subsequent to the incentives package was offered to the construction sector, Rs186 billion projects have been registered on the Federal Board of Revenue (FBR) portal, while Rs116 billion construction projects are in the draft form.

Additionally, Rs163 billion projects have started in Punjab, and construction projects of Rs136 billion worth are in the process of approval.

The government believes that these projects in Punjab would spur economic activities of Rs1,500 billion, create the 250,000 employment opportunities the prime minister said an added construction activities were also in progress in the Khyber-Pakhtunkhwa and Baluchistan as well.

The prime minister said the incentives given to the construction sector especially for low-cost housing and in that first success was the need for a foreclosure law and for the first time, after the approval of a foreclosure law, banks have started providing financing to low-cost housing.

The banks have promised to allocate Rs378 billion for construction activities till December 2021, the prime minister said and added that subsidy on interest payment is capped at five percent for low-cost five marla houses, and seven percent for 10-marla houses, for the next five years.

The government had decided to provide Rs30 billion subsidy on low-cost houses.

For first 100,000 low-cost houses for the poor, a Rs300,000 per house grant would be given, he said.

The prime minister said Capital Development Authority (CDA), Lahore Development Authority (LDA) and the KP government have done great work on automation, and now the approvals are possible in weeks instead of months.

“We are making” new master plan for the big cities as expansion of cities could lead to food security crises, and more importantly, land record digitization would be completed by August 2021 in Karachi, Lahore and Islamabad, and all the government land digitization is important because this is debt capital of the government departments.

The prime minister said there are record sales of cement that indicates that construction activities have started picking up in the country.

The biggest benefit of construction activities, after the government decided to open the sector when the sector was shut all over the world, is Pakistan has been able to come out of corona pandemic in a better way compared to other countries, the prime minister said, adding that “this is the first government after the 1960s to lift the industry that would help the country repay debt through wealth creation and provide employment to youth.”

He pledged to remove the problems that the construction industry faces in the form of red-tapism. The prime minister said prices of steel bars have started increasing and the government would later discuss, measures with a view to bringing them down.

Copyright Business Recorder, 2021