Islamabad: The Budget 2023-24 has unveiled a package of relief measures and incentives for builders engaged in new construction projects, aiming to invigorate the construction sector and drive economic growth.
In an effort to support the construction industry, the Budget 2023-24 introduces significant relief measures and incentives for builders. The builders will enjoy tax relief on their business income, with the option of a 10% reduction or a fixed amount of Rs. 5 million over three years. Individuals undertaking construction projects will also benefit from tax benefits, choosing between a 10% reduction or a fixed amount of Rs. 1 million over the same period. These measures apply to projects starting after July 1, 2023.
In addition to the tax relief, the government has extended its support to the construction industry through a concessional tax rate for banks providing loans to this sector. Initially introduced in 2020, this scheme allowed banks to be taxed at a lower rate of 20 percent on the income generated through loans to construction, agriculture, and small and medium-sized enterprises (SMEs). With the proposal to extend this scheme until 2025, the government aims to sustain the positive momentum and ensure continued financial support for vital sectors that drive economic development.
Furthermore, the Budget 2023-24 introduces a special tax regime for land developers. Under this system, land development businesses, including banks and insurance companies in Pakistan, will be treated as separate entities and subject to scheduled taxation. The proposed minimum tax rate for land developers is set at 5% of turnover, significantly lower than the standard tax rate applicable to individuals, associations of persons (AOPs), and companies. Additionally, a Project Advance Tax is proposed, enabling the collection of a 7.5% advance income tax based on the land’s fair market value at the time of layout plan approval.
By empowering builders and individuals, the Budget 2023-24 sets the stage for progress and prosperity, promoting economic development through new construction projects. For the latest Real Estate News and Blogs, visit Realtorspk blogs.