FBR Finalizes Simplified Fixed Tax Scheme for Real EstateOctober 5, 2019
The government has finalized a simplified fixed tax scheme for developers and builders in the real estate sector.
It will be offering a 90 percent reduction in taxes for low-cost housing schemes, particularly the Naya Pakistan Housing Authority (NPHA). According to the sources, the FBR is giving final touches to the proposed scheme and will announce it in a few days.
A central plan of action will be introduced for the beneficiaries and it will be linked with the FBR through an automated system.
The broad contours of the scheme, according to report, include:
1. National (central) jurisdiction of developers and builders.
2. Simplified return form.
3. Income computation on ‘project-by-project’ basis.
4. Dispute resolution committee.
5. No requirement for developers/builders to operate as a withholding agent.
6. Tax rate of Rs. 210 per square feet for commercial builders in Karachi, Lahore, Islamabad, Hyderabad, Sukkur, Multan, Faisalabad, Rawalpindi, Gujranwala, Sahiwal, Peshawar, Mardan, Abbottabad, Quetta, and other urban areas not specified.
7. The tax rates shall be reduced by 90 percent for low-cost housing schemes; (viii) tax rate of Rs. 210 per square feet for commercial developers (commercial plots) and requirement of the independent certificate from NESPAK.
According to the draft of the Builders and Developers Special Procedures Rules 2019 issued by the FBR, the rules shall apply to builders and developers, who may opt to pay income tax and furnish returns under these rules. The rules will apply to all regions in Pakistan and will be applicable at once. The rules will be applied to all builders and developers, being an individual, an association of persons or a resident company.
According to the rules, the projects’ timeline will be three years and permission will be sought from the FBR for projects exceeding three years. The beneficiaries will not be entitled to file adjustment claims of withholding tax. All the builders and developers of the real estate sector will get themselves registered with the FBR through its IRIS system.
Source: Pro Pakistani