KARACHI: The government has excluded builders from disclosing the source of investment if they complete a new housing project in less than two years, a tax official said on Thursday.
Abdul Hameed Memon, the chief commissioner of Inland Income at the Karachi Intermediate Taxpaying Unit told media that the money-bleaching scheme for new housing projects will only take effect if the project is completed within 21 months.
“Immunity to undisclosed money to be used in new housing projects only applies if the project is completed by September 2022,” said Memon after a session with builders and developers from Sindh and Balochistan on tax relief packages.
“FBR (Federal Board of Revenue) will not ask for investment sources from developers and builders if they deposit money into new bank accounts before December 31 for new housing projects.”
The tax official said the government through amendments to the tax law announced an aid package for the construction sector.
The package has two types of benefits: immunity from questioning the source of the investment; and reduced income tax rates in the form of a fixed tax regime for builders and developers.
The chief commissioner said the package would help boost activity in the construction sector and generate significant economic growth.
Tax officers share presentations with builders and developers about immunity from section 111 of the 2001 Income Tax Ordinance. The section attracts criminal action for individuals who hide assets from tax authorities.
The commissioner said article 111 would not apply to individuals if the individual kept the money in a new bank account until December 31 or had ownership / rights to the land invested on April 17.
In the case of companies or associations of persons, the clause will not apply if the company or association of persons with the sole purpose of registering between 17 April and 31 December.
The commissioner said there were other exemptions and benefits in the tax package and investors would be exempt from having to cut taxes on purchases of building materials except cement and steel. They will be exempted from the withholding tax requirement on the acquisition of services related to construction except those from companies.
Individuals involved in low-cost housing projects will be awarded a 90 percent reduction in their fixed tax obligations, the commissioner said. In addition, dividends paid by construction companies or developers will not be taxed and there will be no deductions for dividend payments, he said.
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