Federal Government Announces Incentives for Construction Sector

Prime Minister Imran Khan on Friday has announced a mega incentive package for the construction sector in order to create jobs and spur economic growth especially in the wake of Coronavirus outbreak.

While preparing this relief package, all the stakeholders have been taken on board and the key suggestions from the Association of Builders & Developers (ABAD) have all been accepted. Many tax benefits for construction and allied industries are announced that can potentially turnaround Pakistan’s economic conditions.

Such an announcement was the need of the day as thousands of daily wagers have become jobless due to the perpetuation of countrywide lockdown.

The construction industry is the second largest sector in the country. The construction sector of Pakistan alone can revive more than three dozen related industries. So, this recently announced package will definitely create millions of job and investment opportunities and will bolster a frail economy.

No doubt, it is happening for the first time that our construction sector is going to be turned into a formal industry. Thus, to promote construction activities in the country, PM Imran Khan has announced to set up a Construction Industry Development Board. This board will operate under the supervision of the Federal Government. Furthermore, the government is also making a strategy to solve the different issues of developers and builders.

 Main Points of the Incentive Package for Construction Industry

Those builders and developers, who will invest in the construction sector especially this year, will not be asked questions about their source of income. So, whatever, be the source of investment of investors, they will be not answerable to FBR for this year. This great initiative of the federal government may bring huge investment in the real estate and construction sector.

Also, the fixed tax will be introduced in the construction sector. Moreover, if the investor invests in construction projects under Naya Pakistan Housing Authority, he will be given a 90% waiver on tax and he will have to pay only ten percent tax.

Withholding tax on construction will be lifted from all sectors, except steel and cement which are formal industries.

In addition, there will be no capital gain tax for a family that sells its house/residential unit.

PM Imran Khan has also reduced the sales tax to 2% for the construction industry.

30 billion rupees worth subsidy is being given to the Naya Pakistan Housing project for the construction of low-cost houses.

Construction Sector has been given the status of Industry. Moreover, the work in the construction sector will start from 14th April 2020.

Incentive Package for Construction Sector and Its Benefits

This surprising incentive package is being welcomed and called historic by the builders and developers. This package will help the construction industry to flourish in Pakistan and will work to improve the economic outlook of the country.

Moreover, another major part of this incentive package is the approval of new residential and commercial projects. Now the development authorities are bound to approve a new project within 45 days of application. This approval can be late but only with a valid objection. It takes a lot of time and money to get NOC for any real estate project. But now these issues have been resolved through this historic announcement.

This incentive package will be a turning point for the Pakistan economy.  Now we all hope that all the relevant departments will follow this newly announced policy for the construction sector. Moreover, we also expect that the Construction Industry Development Board will further devise policies to strengthen the construction industry. So, the new investors can easily invest and can play their part in the economic growth of Pakistan.

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