The federal government has recently announced the financial bill for the year 2020-2021. let us explore the Real Estate Budget of Pakistan 2020-21 Reliefs points.
1) FED on Cement
The FED on cement is proposed to be charged at Rs 1.75 per kg. The previous charges were Rs 2 per kg.
2) Capital gain tax
The distinction between structured property and the open plot has been removed for capital gain tax and there will be no capital gain tax if the holding period exceeds 4 years.
Earlier, there was no capital gain tax for the open plot if the holding period is more than 8 years and in case of structured property, holding period limit was 4 years.
3) Amount of rent of the immovable property
Companies are allowed to claim 2% of the amount of rent of immovable property under the head admin and collection charges. Previously, this rate was standing at 6%.
4) Advance tax
Advance tax from the seller of immovable property is not withheld if immovable property is held for a period of exceeding 4 years. Earlier, this period was 5 years.
5) Claims against property income
Earlier, only individuals and AOPs receiving rental income more than 4 million were entitled to claim expenses against property income. Now all individuals and AOPs are allowed to claim if they opt to pay tax under normal tax regime.
6) Income tax at the time of import
A person directly involved in the construction of buildings, roads, bridges and other such structures or development of land has been included in the definition of an industrial undertaking, therefore, no income tax shall be deducted at the time of import of raw material, plant, machinery, equipment, and parts for its own use. ( subject to withholding tax of 1% or 2%)
7) Withholding tax
Now, Withholding tax on cash withdrawal from a domestic bank shall not be on remittance received in domestic bank account.
However, earlier, it was deducted by the bank on remittance received in the domestic bank account.
8) Inactive Sales taxpayer
Now, a withholding agent while making payment to an “Inactive sales Taxpayer (which includes a registered person not filing sales tax return & an unregistered person) is required to withhold sales tax @ 5% of .value of invoice.
Earlier, A withholding agent while making payment to an unregistered person was required to withhold sales tax @ 5% of the value of the invoice.