Benefits of PM’s Construction Relief Package in 2021

The global pandemic of COVID-19 has deeply affected the construction sector of Pakistan same as the many other fields. This pandemic has completely changed life in the first quarter of the year 2020 as the strict lockdown was imposed across the country. There was also a complete ban on construction activities.

This ban on construction activities was lifted after a month and the work was resumed on April 14, 2020. At that time, the Prime Minister of Pakistan to cover the losses of the construction industry has announced a comprehensive construction relief package. It was basically an amnesty scheme presented for the economic growth of the construction industry.

This incentive package has played a very significant role as per the expectations. This package has not only boosted the construction activities across the country but also a reason behind the huge investment of people in 2020. The expiration date of this construction relief package was due on December 31, 2020. But due to its phenomenal success, its date has been extended till December 31, 2021.

So, let’s find out that are the benefits of PM’s construction relief package in 2021. Will it be beneficial for the economy and real estate sector of Pakistan? Please keep on reading.

Tax Exemptions in PM’s Historic Construction Relief Package

This construction relief package by PM Imran Khan is termed “historic” because of several tax exemptions. The builders and developers of the low-cost projects will enjoy the tax exemptions of 90%. They will also get an exemption from paying the withholding tax on the purchase of different construction materials and related services. Also, these incentives of construction relief package will benefit the investors of the Naya Pakistan Housing Scheme.

No more Capital Gains Tax (CGT)

Before the announcement of this amnesty scheme, the government used to charge around 5% to 20% Capital Gains Tax (CGT) on the sale of plots and houses. But after this package, the practice of collecting CGT has been abandoned. This allows people to easily sell their properties without paying any extra taxes.

Moreover, the concerned authorities have also halved the advance tax percentage from 10% to 5%, which applies to the sales of immovable properties all across Pakistan. Along with these tax benefits, the government has also made a significant reduction in the sales tax.

Construction Relief Package 2021 and Exemption from Disclosing Income Sources

There are around 163 projects onboard worth 136 billion Pakistani Rupees that are registered with FBR. Under the banner of this construction relief package, the government has announced to fixed tax scheme for the investors of these projects. In simple words, the investors of the registered projects with FBR will get an exemption from disclosing their income sources. This announcement will indeed play a major part in the progress of the real estate market of Pakistan in 2021.

Newly Introduced Incentives in the Relief Package for Construction Sector

PM Imran Khan has recently announced some additional incentives for the relief package.  Some of these major announcements are:

The government has extended the date for the disclosures of income sources for investors till June 30, 2021. Also, the buyers will have time till March 31, 2023, to do the same.

The deadline for the completion of the projects is also been extended by one year.

On the directives of the SBP, the commercial banks will continue offering loans for house finance up till December 2021. However, this loan will be only valid for the construction of houses.

Also, the government has announced a new low-cost housing scheme named “Mera Pakistan Mera Ghar.” It’s a house financing scheme where the loans for the construction of 5 Marla and 10 Marla houses will be offered. This loan is available on a maximum of 5% and 7% subsidized interest rates. Additionally, the government will also provide an additional grant of 3 lacs for each of the first 1 lac constructed houses.

So, these all were the initiatives that will do work for the progress and prosperity of the property sector of Pakistan in 2021.

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