construction industry, PM’s Relief Package Construction Sector
The construction industry finally got PM’s attention, well, if you may have noticed that the “construction sector” has turned into “construction industry”, thanks to the recent relief package introduced by the Prime Minister of Pakistan. There’s more to it that we will further talk about in the article.
The point at the moment is the “relief package for the construction sector”. The Prime Minister has taken initiative to increase employment in the country that was under the mercy of Covid-19. As we all know a time came at the beginning of the corona outbreak when the construction companies were getting diversely affected and the employment of thousands of people was questionable, they lost their jobs.
Considering the situation now, Prime Minister Imran Khan has announced a relief package and you are going to read its objectives further in the article. The main purpose of it is to overcome the economic distress the country had to face in the past year. Let’s study what the PM has offered to the construction sector.
A New Status was Given to Construction Sector
It was a really big announcement to give the construction sector the status of the industry. And the construction companies that got closed due to the pandemic were asked to reopen from April.
As agriculture and construction are the two main sectors that run the country’s economy as they are so vast, the PM also set up a board for the construction sector named, Construction Industry Development Board. And it was set to promote this industry and work for its development.
He also mentioned the main purpose he is paying heed to the construction industry. It was mainly due to the number of employers who lost jobs, not just the ones working in the companies but the laborers as well who were daily wagers and had to face extreme hard times due to the lockdown.
If you think about it, you will notice that the agriculture sector and construction sector are the main occupations of the people living in rural areas and urban areas, respectively. And in the case of these sectors closing down, not just the employers but the country’s economy also gets directly affected by it.
Main Incentives of the Relief Package
- The first point of the PM’s relief package regarding the construction industry was related to the investment to be made in this industry. According to it, anyone making investments in the construction industry won’t be asked about their source of income.
- A fixed percentage of tax will be set for the construction sector. But there will be an exception for the investors who will be investing in the construction under Naya Pakistan Housing Authority, as they will only have to pay 10% of the tax instead of 90%.
- If it’s a family selling their house, according to the PM, there won’t be any capital gain on that property.
- Specifically for the construction sector, there will be a fixed rate of tax that they will have to pay. Besides, constructors will pay the tax on every square foot or square yard.
- Sales tax over the construction sector is said to be reduced in every province. Whereas Punjab and Khyber Pakhtunkhwa have agreed on reducing it to 2%.
- PM Imran Khan confirmed an aid of PKR 30 billion will be given to Naya Pakistan Housing Project by the government to encourage the construction of housing. This will directly benefit the country.
- With the coordination of Punjab and KPK, Sales tax is being reduced to two percent.
- For the constructed property, the CGT holding period is decreased from 4 years to 3 years
- Builders and developers can take credit income, equal to 10 times their paid tax while declaring their net wealth.
The Bottom Line
Under this package, any person who will invest under the scheme on purchase of land and constructing any structure till 30 June 2022 will be excluded from provisions of Section 111 of the Income Tax Ordinance 2001.
Other than that, if anyone starts construction on already owned land or buys a new land and then starts construction within this period, then he will also be exempted from the above-mentioned clause of income tax.
In short, this package, if implemented properly, can majorly help the construction industry and the people related to this industry. It should be monitored deeply and ensure that the investor will not only buy clusters of lands but also construct them so that the poor can get the real benefit.