The government has promulgated the Income Tax Amendment Ordinance, 2021 to change the dates for the extension of the tax amnesty scheme for the construction sector.
The Income Tax Amendment Ordinance 2021 has amended the relevant provisions of the Income Tax Ordinance, 2001 to extend the deadlines for the developers and builders seeking immunity from the probing of their source of funds, availing fixed tax regimes, and the last date for the completion of projects.
The Federal Board of Revenue (FBR) has also amended the rules for the computation of the profits and gains of the builders and developers and the tax payable thereon.
Through this ordinance, the income computed and tax payable will be on a project-to-project basis which will be computed and paid at the specified rates.
The estimated project life for tax purposes will not exceed three and a half years.
According to the ordinance, in the case of the existing incomplete projects, the estimated project life will be treated as four years maximum from the tax year 2020 through the tax year 2023, and the tax payable will be reduced by the percentage of the completion up to the last day of the accounting period pertaining to either the tax year 2019 or the tax year 2020 as declared in the registration form.
Under the ordinance, the deadline for the builders and developers to seek immunity from the probes into their source of funds and for availing the fixed tax regime has been extended from 31 December 2020 to 30 June 2021. The deadline for the builders and developers to avail of the fixed tax regime has also been extended from 31 December 2020 to 31 December 2021.
Similarly, the deadline for the completion of projects has been extended from 31 September 2022 to 30 September 2023, and the deadline for the buyers of housing units and plots has been extended from 30 September 2022 to 30 March 2023 under the ordinance.
The Income Tax Amendment Ordinance, 2021 has also amended the registration and filing of returns by the builders and developers.
Under the revised procedure, a builder or developer is required to register a project electronically on the IRIS through the FBR website either on or before 31 December 2021.
Additionally, when the benefit of sub-section 3 of section 100D is required to be claimed by a developer or builder, the project in question will have to be registered by 30 June 2021 at the latest.
A tax expert said that the benefit of sub-section 3 of section 100D means that the provisions of section 111 (probing the source of an unexplained investment) will not be applicable on the capital investment made for the new projects in the form of money or land. In this case, the developer or builder is required to register the project by 30 June 2021.
Courtesy: Pro Pakisan (Govt Announces New Ordinance to Extend Tax Amnesty for Construction Sector (propakistani.pk)