House Construction Cost after the Construction Relief Package of 2020 – 2022

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    Mohsin Munir

    Government of Pakistan has announced construction relief package for construction sector. In this video we have briefly explained the factors this relief package will have on private construction sector and how the reduction in taxes will possibly see a reduction in construction cost.

    Mohsin Munir

    Key points (for builders & house construction services companies) of the relief package announced by the Government of Pakistan in collaboration with all the Provincial governments.

    – Construction sector has been given the status of an INDUSTRY and income from this shall be considered as a separate class

    – Any investment in construction sector till 30th June 2022 shall not be questioned for the source of income

    – Fixed tax rate shall be applied on all types of constructions and rate proposed is 50 Rs / sqft of construction (covered area)

    – Withholding taxes shall be waived off/reduced on all construction sectors except steel and cement

    – Sales tax to be reduced in coordination with the provincial governments

    – No capital gain tax for builder who is selling his first project/house

    – No capital gain tax for family selling inherited house

    – No tax to be withhold (on services such as masonry, plumbing, electrician, shuttering, scaffolding, carpenters etc) by the builders provided that the builder or developer are chargeable to sales tax at fixed rate mentioned above

    • This reply was modified 1 year, 5 months ago by Mohsin Munir.
    Mohsin Munir

    15TH April UPDATE:

    Government of Pakistan has announced the resumption of construction work and all industries related to construction will also be allowed to start production/manufacturing/retail.

    Mohsin Munir

    15TH April UPDATE:
    Government to approve announced historic construction relief package through presidential ordinance in 2-3 days. PM Imran Khan in press conference stated on 14th April 2020

    Mohsin Munir

    18th April update:

    Government of Pakistan today passed an ordinance on Construction Relief Package. In this article and video we have explained that ordinance briefly and how it will effect the general public. We discussed the following points in the video:

    1)All construction material except cement and steel to be exempted from With holding tax

    2) Fixed tax for builders and developers at the rate of Rs 50 and Rs 100 respectively per sqft or per sq yard of covered area or land area respectively

    3) No sales tax will be charged on Services and fixed tax has been implemented.

    4) Scheme will be valid for the projects started before 31st Dec 2020

    5) No amnesty for cash transactions, all cash will have to be deposited in bank account first and all transactions to be done in cross cheque instruments

    6) Project deadline will be 30th sept 2022 in case of builders if only grey structure is complete till the dead line project shall be considered for amnesty

    7) If any investor/buyer intends to purchase flat/house/building, can avail the amnesty scheme by purchasing the property before 30th sep 2022 provided transaction is done through banking channel and cross cheque instruments

    8)Capital gain tax waived off for first project

    9)Maximum house size allowed in this amnesty is 1 kanal/500 sq yd. Incase of flat maximum covered area should not exceed 4000 sqft

    10)CVT exempted by the federal government

    11)Construction sector given status of INDUSTRY

    Mohsin Munir

    There has been significant Increase in prices of construction material during the Covid 19 lock down. Steel prices went up because of no imports and even the cement prices are said to go up. How will Gov of Pakistan tackle these issues?

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