The Prime Minister of the Islamic Republic of Pakistan announced a historic relief construction package, Amidst of global health crises and a state of health emergency locally and internationally, will this boost our economy? Perhaps.
The government has announced this special construction package for encouraging construction and incentivizing economic growth for the daily wage earners. This package can improve economic activity and fuel in changes in the current development level in the country.
This is an attempt to manage the economic impact of a global pandemic. Although the Construction Package has been in the news headlines of the nation for long, the timing could not be any better for the working class. The construction package offers incentives for those looking to construct. The end goal is to promote possibilities for the daily wage earner across the country as well as to improve the rate of infrastructural development and progress within the nation. Infrastructure is one of the main factors that affect the aggregate demand in an economy and help in improving the internal equilibrium within a state.
The lockdown is in effect in many parts of the nation at varied scales or intensities. Construction companies looking to invest are nonetheless ready to take advantage of this package. The policies can be implemented once the strict policies on all non-essential businesses are lifted after the delayed lockdown to 21st April. The major benefit to the country will be of generating employment and stirring incomes in households among low-income families. Whereas the relief or the benefits to the person constructing are as follows:
- Investors in construction projects will not be questioned on their source of income
- A fixed tax is to be introduced in the Budget of 2020
- Any investor investing in projects under the Naya Pakistan Housing Authority, 90% fixed tax will be removed and he will only pay 10% tax.
- Withholding tax on construction to be lifted from all sectors, except steel and cement
- There will be no capital gain tax for a family that sells its house.
- constructors will be charged tax per square foot or square yard.
- A subsidy of Rs. 30 billion is being given to Naya Pakistan Housing project
- Sales tax are being reduced in coordination with the provinces
- Construction Industry Development Board to be set up
- Rate of tax be reduced in accordance with a proportionate to the increase in the valuation table
- Capital Gains Tax holding period for the constructed property be reduced from 4 years to 3 years
- Capital Gains Tax holding period for real estate and plots may remain 8 years
- While declaring their net wealth, builders and developers will be eligible to take credit or impute incomes that equal to 10 times of tax paid under this policy
One of the key features of this plan is that any person who wishes to invest under this scheme until 30 June 2022 will be exempt from the provisions of Section 111 of the Income Tax Ordinance 2001. The investment can be on a house, commercial building etcetera. This may be in the form of plain land or construction of a structure or semi-built nature. Thus, the tax on concealed income will not apply under this policy to individuals. This makes it a prime time for investment in real estate and the future you hold.
Furthermore, individuals will be free from taxes on the construction of any structure on already owned land as well as on the first purchase of a newly constructed property.
The amount of such investment can be incorporated in a wealth statement of the individual though. This converts your money into legally visible, declared, white money. Greater details, allowances, and relief policies will be revealed after the issuance of FBR’s notification on the subject and during the announcement of the federal budget.
Prime Minister Imran Khan also announced that a Construction Industry Development Board is also underway to improve the performance of the construction industry.
The focus on construction is primarily due to the vast majority of the country living under and on the poverty line. This package is designed to improve the scope of work that a daily wage earner may earn per day. It will also help people in quickly developing without the need for waiting for the declared income to pile up before they invest or begin work on their dream home. The relief is dual-sided. It suits the needs of the daily wage workers, many of whom have lost their livelihood due to the ongoing health crises as well as the investors who may need some tax rebates for improved profit flows.
The Prime Minister also announced that new policies for construction work in Pakistan are only a small part of his plan to stimulate the economy. According to him, the rural areas through the agriculture sector and the urban areas through construction can be rejuvenated providing employment opportunities and improvements in standards of living.
The Prime Minister stated that coronavirus has become a tricky global challenge. Businesses are shutting down across the globe. Offices are closed, lives are not normal and people are staying indoors. Despite a very socially active culture in Pakistan, the community is bound to stay indoors. During this time, construction can be recovered and made prominent as a growing industry under controlled systems.
You can seek benefits from these new policies for construction work in Pakistan right away. In order to book property and to start your own venture for residential or business purposes contact one of our experts on the subject right away. Secure your future.