Considering the important role of the construction and allied industries in the economic development of the country, the government has decided to provide incentives to builders and individuals undertaking the construction of new houses and buildings.
The government has decided to provide tax relief of 10 percent or Rs. 5 million on the business income of builders for the next three years.
A similar incentive will also be provided to individuals i.e. they will get tax relief of 10 percent or Rs. 1 million for the next three years. The tax relief will be applicable on construction projects that start after July 1, 2023.
To promote the construction industry, agriculture, and small and medium-sized enterprises (SMEs), the government had introduced a concessional rate of tax for banks providing loans to these sectors from 2020 to 2023.
The income of banks through loans provided to these sectors was to be taxed at a concessional rate of 20 percent against the standard rate of 39 percent.
The concessional tax rate was ending this year but the government has proposed to extend this scheme for two years i.e. till 2025.
REIT schemes
Moreover the government has decided to extend the tax concessions offered to Real Estate Investment Trust (REIT) schemes till June 30, 2024.
Special Tax Regime for Land Developers
Scheduler Taxation is proposed for land developers like banks or insurance businesses. Land development businesses will be treated as separate business taxed under a special schedule on project-basis.
The rate of tax as minimum tax u/s 113 (Turnover Tax) is proposed at 5 percent of turnover. The standard rate of tax as applicable to individuals/AOPs/companies is 1.25%. Project Advance Tax is proposed.
On first approval of Layout Plan (LoP), Advance Income Tax @ 7.5 percent of the fair market value of the land at FBR Table value to be collected by Approving Authority to be adjusted in three years again project yearly income tax liability.
Source: Pro Pakistani