FBR has decided encourage builders/developers to avail the scheme by registering themselves with it by the December 31, 2020 deadline
ISLAMABAD: The Federal Board of Revenue (FBR) has decided to launch an aggressive campaign to attract developers/builders to avail the Prime Minister’s Amnesty Scheme for Construction Sector after it failed to get an impressive response.
The FBR has decided to encourage builders/developers to avail the scheme by registering themselves with it by the December 31, 2020 deadline. The FBR has decided to go to the public to apprise it regarding full details with potential developers/builders so that maximum people can benefit from it.
The FBR has made it compulsory to register with tax authorities till the December 31, 2020 deadline and disallowed payment of fixed tax amount after expiry of the scheme on September 30, 2022, if one were to avail the amnesty scheme. People who owned registered land since April 17, 2020 could avail this scheme when the Ordinance was promulgated. The registration with the Bureau’s designated portal has been set to December 31, 2020.
“Only those will become eligible to get benefit who will get themselves registered with the FBR till the envisaged deadline of December 31, 2020 and deposit the amount into a new bank account. The project completion deadline has been envisaged on September 30, 2022. After expiry of deadline and in case of non-completion of the declared project the fixed scheme benefits will be disallowed,” top FBR officials said on Monday.
The top FBR team, including Chairman Javed Ghani, briefed investors and builders during a webinar on Monday that up to 3000 square yards, the per square yard tax rate will be charged and if the area of construction tends to exceed, then the rate would be charged at Rs125 per square yard.
The FBR team clarified that there will be no limit to the size of the construction as it can be built from 2 marlas to any unlimited ceilings. To avail the incentive packages, it will be compulsory for the FBR to file income tax returns and registration with the Bureau to avail the incentive package.
The renovation business is not covered under the amnesty scheme. FBR officials further revealed that exemption from the provisions of Section 111 shall also be available to the first purchaser of newly-constructed buildings of a project. However, that will be the case if the purchase is made on or before September 30, 2022, in the prescribed manner. Thus, the extension in the said deadline is not possible. The deadlines mentioned in the scheme have to be followed and cannot be extended, FBR officials said.
Dr Nauman from the FBR said that a 90% reduction will be made available for low-cost housing schemes of Naya Pakistan Housing Authority (NPHA). Hence, this means that projects approved by the NPHA or the Ehsaas Programme will only have to pay a 10% of their tax liability.
If builders and developers do not attach all approved documents with the FBR’s online portal, a temporary registration will be issued. The Bureau also said that immunity under the construction scheme has been extended only to new projects.
The provisions of Section 111 of the Income Tax Ordinance, 2001 shall not apply to any shareholder or partner of a builder or developer in respect of any amount invested as capital in a builder or developer or land possessed or acquired by the builder or developer, or its partner in case of a limited liability partnership or an association of persons, if the amount is invested as capital or the land is transferred on or before December 31, 2020 in the manner as prescribed and is utilised in a construction or development project in the specified manner.
FBR officials clarified that the amnesty scheme would be available to projects started before December 31, 2020 and existing projects registered with it.
The new and ongoing projects would be required to be registered on the ‘IRIS’ portal of the FBR and the ongoing projects should tell about their completion ratio and need to pay taxes for the remaining work under the new fixed tax scheme.