Imran Khan Announces New Construction Policies for Real Estate
In the recent Covid19 lockdown in Pakistan, the economy of the country is predicted to suffer at a massive level. This aspect has been pointed by the Prime Minister of Pakistan Imran Khan, and the PTI (Pakistan Tehreek-e-Insaf) government has devised some polices.
On 3rd April 2020, the Prime Minister of Pakistan announced a number of new policies and incentives targeting the construction sector of the economy. Moreover, the Naya Pakistan Housing Project has been put forward to invite investments from inside as well as outside the country.
This article outlines and summarizes all the new tax and construction policies announced by Imran Khan.
Imran Khan’s New Tax and Construction Policy
Keeping in mind the importance of construction sector in Pakistan, PM Imran Khan has announced the continuation of activities in this sector. According to the PM, the construction sector is the second most important sector in Pakistan after agriculture.
This is primarily because of the fact that this industry provides job opportunities to a large portion of the population. Its an industry that provides daily wagers with consistent opportunities to earn. Therefore, the PM announced that the construction sector would not shut down and incentives would be given to people investing in real estate.
The purpose of this is to make sure that the wheel of economy is moving considerably. This includes construction of building, houses and road. According to the Prime Minister, these are major incentives by Pakistani government for the construction sector.
Less Regulation on the Source of Investment
The first incentive announced by the government has to do with the policy of money trail. According to this new policy, the people looking to invest in the real estate and construction sector would not be interrogated for the source of income.
Less regulations would be imposed on this sector, and the investors would feel secured. The government, as a result of this construction policy, shall not ask the investors for sources and fluent investments mechanisms would be designed.
Fixed Taxes for Construction and Real Estate
In this recent press conference, the PM announced that there would be a fix tax rate for the construction sector. This policy is aimed to eliminate any harassment or corruption in the real estate sector, and to bring ease into the process.
The taxes would be calculated based on Sq. Yards, and this was something demanded even earlier by the real estate sector as well.
Policy for Naya Pakistan Housing Scheme
PM Imran Khan has announced this Naya Pakistan Housing Project was the most important aspect for the real estate investors. According to this policy, the real estate investors looking to invest in Naya Pakistan Housing Project will have almost 90% of their taxes waved off.
This extraordinary incentive for investments is meant to attract investors in this project for low-income citizens of the country. Therefore, this can be termed as a win-win situation where the real estate industry as well as the low-income people in Pakistan would flourish simultaneously. Moreover, a 30 Billion Rupee subsidy would be given to this sector for its progress and development.
Withholding Tax on Material and Services
According to the announcement, PM Imran Khan briefed that the withholding taxes on all material and construction services are waved off. This is another break through made by this policy, and it is predicted to boost the real estate construction in Pakistan at a tremendous rate. However, the formal construction sectors such as Cement and Steel would still be liable to pay this withholding tax.
Coordination with the Provinces
Another part of this new construction policy is focused on coordination with the construction sector. PM Imran Khan briefed media regarding the reduction of sales tax by provinces including Punjab and Khyber Pakhtunkhwa. The sales tax would be reduced to only 2 percent in these aforementioned provinces to facilitate buying and selling of property in Pakistan.
This means that any family wanting to sell their house in future would not be liable to pay any capital gains tax.
Construction Sector to be Transformed into an Industry
Considering the importance of the construction, the Prime Minister has announced that the status of the construction sector is to be upgraded to an industry. A strong CIDB (Construction Industry Development Board) will be established in order to regulate and incentivize this industry.
As a result of this decision, the real estate sector in Pakistan is predicted to rise in stature and development. The future of real estate in Pakistan is considered to be bright and full of lucrative opportunities for investment. Housing societies such as Capital Smart City Islamabad and Blue World City Islamabad are expected to flourish and provide Pakistan with tremendous real estate infrastructures.
However, the nation still needs to be strong as the threat of Covid19 is still present. Hopefully once this lockdown has ended, the fruits of these new construction and real estate policies shall be materialized. Hence, we can claim that this new construction and tax policy by Imran Khan seems to be a positive step towards tackling economic downfall in the current scenario.