The new tax regime will reduce tax rates for the builders of low-cost housing projects
The individual builders, developers as well as real estate and constructions companies benefitting from the fixed tax scheme will have to file their returns as per the Builders or Developers Special Procedure Rules 2019. As per the rules drafted by the Ministry of Finance and the Federal Board of Revenue, the new tax regime will apply to builders, developers and companies who pay income tax and file returns under these rules. The income and payable tax will reportedly be computed on ‘project-by-project’ basis.
Property developers or builders availing the fixed tax scheme for real estate will be required to electronically file their returns with the evidence of payment of due tax. Individuals who have a National Tax Number (NTN) but haven’t filed their tax returns in the last five years can also opt for this scheme by registering through IRIS.
Furthermore, according to an English daily, the individual beneficiaries of the FBR’s fixed tax scheme for real estate will not be required to act as withholding agents. They will not be permitted to file adjustment claims for the collected or deducted withholding tax either. The same goes for claiming tax credit and refund. However, companies will be allowed to withhold tax on the purchase of certain construction materials, such as cement and steel, along with electronic equipment.
In addition to that, builders and developers who opt for this scheme will have to seek FBR’s approval for the construction of projects that exceed the three-year time limit introduced by the authority.
It is also important to mention these rules will be applied to relevant individuals, associations and companies all across Pakistan.
Please note the blog will be updated as more information is released.
Meanwhile, you can check out our in-depth explanation of property tax rates in Pakistan to understand how they are levied. You can also take a look at different types of property taxes in Pakistan for a better understanding of the topic.
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