ISLAMABAD: With the last date nearing, as many as 330 projects worth Rs121 billion have been registered with the Federal Board of Revenue (FBR) along with another 218 tentative projects with an indicative investment of Rs88bn under the prime minister’s package for the construction industry.

At the same time, as many as 3,627 buyers have shown interest in buying these properties by availing tax incentives for the construction sector with an indicative investment of Rs226bn until Dec 30.

Every builder and developer is required to get registered on computer-based IRIS software of the FBR on or before Dec 31, 2020, and the projects are required to be completed before Sept 30, 2022.

Prime Minister Imran Khan had announced the package for the construction industry in April 2019.

Tax officials believe that there are a number of indicative projects of builders and developers which are still in the process of preparation. Therefore, it will be necessary to give either projects-specific extension or general extension in the scheme.

Over 3,620 buyers show interest in buying these properties by availing tax incentives

The International Mone­tary Fund has already given waiver to the government on several other tax initiatives due to the Covid-19 impact. The officials believe that further extension until June 2021 will not be an issue for the government as it will promote economic activities in the country.

The break-up of data until Dec 30 shows that only 183 projects with an estimated cost of Rs96bn were registered on a permanent basis with the FBR which fulfill all requirements, including registration of taxpayers. Besides, there are 147 projects which were submitted temporary with the FBR with an indicative investment of Rs25bn.

According to a tax official, the temporary submitted project means that a taxpayer is registered with the FBR, but certain details remain such as the amount to be invested or approval plans. But the taxpayer has committed himself to get registered, the official adds.

A bulk of 218 projects with an indicative investment of Rs88bn is in draft stages. According to the official, these are mere drafts which are at different stages of preparation and approval. These projects’ full registration may require extension in the scheme.

The break-up of buyers’ category shows that only 73 individuals were registered with the FBR to avail the scheme involving an amount of Rs126bn indicating to buy the properties from builders and developers. And 3,554 individuals, who have prepared their drafts with an investment of Rs100bn till Dec 30, 2020, remain at different stages of preparations.

According to the FBR, the prime minister’s construction package for builders and developers is in full swing. The package was promulgated through the Tax Laws (Amendment) Ordinance, 2020, whereby a new section 100D and Eleventh Schedule were inserted in the Income Tax Ordinance, 2001. The package is very vast in scope and offers handsomely attractive tax incentives.

The package is applicable to both the builders and developers of the land and covers both the new and existing construction and development projects. Builders and developers can avail the tax benefits of the package in respect of residential as well as commercial buildings.

This can be availed by individuals, association of persons and companies, irrespective of the entity status. It provides for fixed tax rates on per square foot and per square yard basis for builders and developers, respectively.

The tax so calculated is reduced by 90 per cent in cases of low-cost housing projects. Moreover, in order to facilitate the shareholders of limited companies, the dividend income of the shareholders has been made tax free. The package also provides for many concessions from withholding taxes.

In order to mobilise investment, a complete immunity from probe into the sources of investment has been provided to the builders/developers and to the buyers of the properties of such projects subject to fulfillment of certain conditions.

Published in Dawn, December 31st, 2020