Tax incentive package announced: Construction, housing, manufacturing sector

The government has announced tax incentive package for construction/ housing and manufacturing sector along with aviation sector and relief measures for Khyber Pakhtunkhwa in budget (2015-16). According to the details issued here on Friday, mark-up on housing loans obtained by individuals from banks and other institutional lenders for construction or buying of a house, to be allowed as a deduction against income up to 50% of taxable income or Rs 1 million. Suspension of Minimum Tax on Builders:
The minimum tax on builders leviable for the business of construction and sale of residential and other buildings is being suspended for a period of three years. Under the Real Estate Investment Trust (REIT) Development Schemes, Capital Gain of any person who sells a property to a REIT development scheme formed for the development of housing sector will be exempt from Income Tax up to 30.6.2018. If a development REIT Scheme for the development of housing sector is set up by 30.6.2018, for the first three years the rate of Income tax chargeable on dividend income of such REIT shall be reduced by 50%. The supply of bricks and crushed stone will be exempted from Sales Tax for three years up to 30.6.2018.
The government has also announced a reduction in customs duty on import of Construction Machinery. On import of construction machinery in used condition by the Construction Companies registered with Pakistan Engineering Council and SECP, the Customs Duty is reduced to 10%.
Incentive Package for Manufacturing revealed that if a company, being a Manufacturer, set up during next three years and employs more than 50 Employees, duly registered with Social Security and Employees Old Age Benefit Institution an employment tax credit equal to 1% of the income tax payable for every 50 employees, shall be provided to the company, subject to a maximum of 10%. On demand of various investors and business community, the exemption to Greenfield Projects is being extended up to 30th June, 2017.Exemption from income tax for 5 years is being granted to industrial undertakings engaged in the manufacture of equipment, plant and items required to produce solar and wind energy.
Incentives for Aviation Sector revealed, it is proposed that Customs Duty, sales tax and withholding tax in respect of various items used in Aviation Sector may be reduced to zero subject to certain conditions. Infrastructure connectivity with major economic hubs is key to economic development of a region. Some areas of the country having great economic potential are however located far from existing major economic routes. In order to open up remote areas through aviation links it is proposed that air routes in Gilgit Baltistan, Makran coastal belt, Azad Jammu and Kashmir, Chitral and FATA be exempted from payment of FED and withholding tax.
To revive the economy of Khyber Pakhtunkhwa and to provide relief to the people, the following measures are being taken: Firstly, five years Income Tax holiday on all new manufacturing units set up in KP between 1-7-2015 and 30-6-2018 and exports of perishable goods namely fruits, vegetables, dairy products and meat shall be allowed against Pak currency instead of dollars w.e.f. 1-7-2015.