Construction Sector is Now Given A Status of Industry – What to Expect

PM Imran Khan has recently announced the biggest relief package for the real estate or more appropriately for the construction sector of Pakistan. After this announcement, the construction sector has now gained the status of the industry. This kind of package has never been introduced that’s why the members of ABAD have called it’s a historic move.

Let’s discuss some of the most important points and also the advantages of this package!

Features of Incentive Package for Construction Sector

The biggest feature of this incentive package is that investors will now make a huge investment in the construction industry. These investors will be free from proving their source of income starting April 2020 up till 2022. This means, that anyone with any kind of funds can confidently buy land and can start construction.

Next, this recently announced package has waived off capital gains tax for the sale of existing houses. However, a fixed tax system is introduced. Moreover, withholding tax (WHT) on all building materials is also waived off other than steel and cement. At the same time, there is an added tax incentive for investors and developers investing their money in Naya Pakistan Housing Projects. These developers will only have to pay a 10% fixed tax on construction if they are the participants of Naya Pakistan Housing Projects.

In addition to this, a Construction Industry Development Board will be formed that will support this sector. They will also update the Valuation tables under FBR to reflect market prices; while the holding period for the constructed property is reduced from 4 years to 3 years.

Lastly and most importantly, the mortgage will be offered at 6% for the construction of 100,000 low-cost houses. And also, a civil procedure ordinance for ICT (and all provinces) will be prepared by the Ministry of Law and Justice. Moreover, special benches will be formed to tackle civil disputes.

Benefits of Converting Construction Sector into An Industry

This incentive package was much needed to spur housing. It was needed for the completion of 5 million low-cost houses developing under the project the Naya Pakistan Housing Program. This project has so far been hitting a lot of snags. But now this special incentive package will once again breathe life into it.

Secondly, Construction is one of the top employment sectors in Pakistan. It is a sector that offers employment to both skilled and unskilled workers. With the country tackling Coronavirus while locking down all the cities, this package is announced at the right time. This package will create thousands of new jobs. It will allow a productive avenue for investors to invest their money in. Particularly it will offer jobs to daily wagers. And will also help to improve Pakistan’s economic growth.

Most importantly, this package will lead to a lot of new construction in Pakistan especially in residential projects.  But still, more details are needed to ascertain its true impact. It also requires thinking about the challenges that this incentive package might bring moving forward.

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