The federal government has proposed in the budget several relief measures for the country’s real estate sector and for the allied industries as well with an aim to help the daily wagers and laborers.
Tax Relief on CGT
In the budget speech, Hamad Azhar also said that the government has proposed the eradication of the bifurcation concept of constructed property to determine properties holding period for collection of capital gains tax (CGT). The period for holding CGT has now been reduced to four years from eight years. He further added that the CGT ratio on disposal of property is also being reduced.
The government has planned 75% CGT on immovable properties sold within two years of its purchase, 50% if it is sold within three years, 25% if sold within four years of purchase and 0% CGT if the immovable property is sold after the four years of its initial purchase.
Relief for builders
Azhar announced that the government had proposed a new taxation system for builders to give them relief in taxes. He further said that that builder would be required to pay PKR 250 per square feet on units sold in commercial and residential buildings in Islamabad, Lahore, and Karachi, whereas builders engaged in the sale of property units in Peshawar, Rawalpindi, Hyderabad, Multan, Faisalabad, Gujranwala, Sukkur, and Sahiwal will be required to pay PKR 230 per square feet.
This levy is part of the fixed tax regime for builders and developers promulgated via the Tax Law Ordinance 2020 announced in April to offer relief to the construction industry. The relief aims to facilitate builders and developers registered with the Federal Board of Revenue (FBR).
Tax relief for cement and steel sector
The government has further proposed to reduce Federal Excise Duty on cement to PKR 1.75 kg per kilo from the duty of PKR 2 per kilo. This initiative, as per the federal minister, is expected to reduce the price of a cement bag by PKR 25.
In addition, the government is reducing regulatory duty on steel and hot-rolled iron coils from 11% and 6% respectively, which previously was 17.5% and 11.5% in the same order.
