- June 13, 2023
- Posted by: Muhammad Shehzad
- Category: RBS News
Tax Relief for Builders and Individuals
According to the Budget 2023-24, government has proposed tax incentives for new construction projects. This is done in order to recognize the vital role of builders and individuals in the nation’s economic development. A news source confirmed the information on June 9.
Tax Breaks for Builders according to Budget 2023-24
In the 2023-24 budget, builders will enjoy a 10% tax relief on their business income for the next three years, with a maximum cap of PKR 5 million. Similarly, individuals involved in construction projects will receive a 10% tax break or up to PKR 1 million for the next three years. These tax advantages will take effect from July 1, 2023.
Concessional Tax Rate for Banks according to Budget 2023-24
To boost growth, the government plans to increase the concessional tax rate for banks’ lending to the construction industry, agriculture, and SMEs for two more years. Initially applicable from 2020 to 2023, this plan enabled banks to pay 20% lower taxes on the loans they issued.
Unique Tax Structure for Land Developers according to Budget 2023-24
The new law will recognize land developers as independent entities and subject them to project-based taxation. The scheduler system will tax banks and insurance corporations involved in land development. The suggested minimum tax rate for land developers is 5% of turnover, significantly lower than the ordinary tax rate of 1.25% applicable to individuals, associations of people, and businesses.
Project Advance Tax
The government is considering implementing a project advance tax. Under this tax, the approving authority will receive 7.5% of the fair market value of the land. This would be at the Federal Board of Revenue (FBR) Table value subsequently after approving the Layout Plan (LoP). This amount will be adjusted over three years to account for the project’s yearly income tax obligation.
In order to stay informed about the latest developments regarding ‘Government Reveals Builder-Friendly Tax Incentives in Budget 2023-24’, we encourage you to stay connected with Royal Business Solutions, your trusted source for timely updates and valuable insights.