Wednesday , September 23 2020
Breaking News
Home / Breaking News / Govt gives amnesty to illicit money in case of investment in construction industry
Govt gives amnesty to illicit money in case of investment in construction industry

Govt gives amnesty to illicit money in case of investment in construction industry

ISLAMABAD: The government has given an amnesty to illicit money in case of investment made into construction industry as no question of money to be asked under Income Tax Ordinance, 2001.

Federal Board of Revenue (FBR) on Monday issued the Tax Laws (Amendment) Ordinance No.1 of 2020 after the approval from the president.

The ordinance says that it was being promulgated, “whereas, the COVID-19 pandemic has created a worldwide crisis due to which industries, businesses, offices, service has been shut down in Pakistan and economic activity is at a standstill.”

“And whereas, in order to protect and revive the economy of Pakistan, it is essential and critical to give incentives for revival of the construction industry with certain conditions as provided for in this ordinance.”

Amendment has been made to Income Tax Ordinance, 2001 under which Section 111 shall not apply to the first purchaser of a building or a unit and capital investment made in a new project in the form of money or land.

Section 111 of the Ordinance deals with concealed or undeclared money whereas harsh penalties under the ordinance have been outlined for undeclared money.

According to the sub-Section 3 of Tax Laws (Amendment) Ordinance No.1 of 2020, the provisions of Section 111 shall not apply to capital investment made in a new project in the form of money or land, subject to following conditions, namely:

(a) if the investment is made by a builder or developer being an individual –

(i) in the form of money, such builder or developer shall open a new bank account and deposit such amount in it on or before the 31st day of December 2020; or

(ii) in the form of land, such builder or developer shall have the ownership title of the land at the time of commencement of the Tax Laws (Amendment) Ordinance, 2020;

(b) if the investment is made by a person in a project through a company or an association of persons;

(i) such company or association of persons shall be single object (builder or developer) company or association of persons registered under the Companies Act, 2017 or the Partnership Act, 1932, as the case may be, after the date of commencement of the Tax Laws (Amendment) Ordinance, 2020 and on or before the 31st day of December, 2020; and

(ii) the person shall be a member or shareholder of such association of persons or company, as the case may be;

And if the capital investment is made,

(i) in the form of money, such amount shall be invested through a crossed banking instrument deposited in the bank account of such association of persons or company, as the case may be, on o before the 31st day of December, 2020; or

(ii) in the form of land, such land shall be transferred to such association of persons or company, as the case may be, on or before the 31st day of December 2020;

Provided that the person shall have the ownership title of the land at the time of commencement of the Tax Laws (Amendment) Ordinance, 2020;

(c) a person making an investment under the ordinance shall submit a prescribed form on IRIS web portal;

(d) a person making an investment shall be wholly utilized in project; and

(e) completion of the project shall be certified in the following manner, namely:

(i) in case of a builder, the map approving authority or NESPAK shall certify that grey structure as per the approved map has been completed by the builder on or before the 30th day of September 2022; and

(ii) in case of a developer

(A) the map approving authority or NESPAK shall certify that landscaping has been completed on or before the 30th day of September 2022;

(B) a firm of chartered accountants having an ICAP QCR rating of ‘satisfactory’, notified by the Board for this purpose, shall certify that at least 50 percent of the plots have been booked for sale and at least 40 percent of the sale proceeds have been received by the 30th day of September, 2020; and

(C) at least 50 percent of the roads have been laid up to sub-grade level as certified by the approving authority or NESPAK.

The sub-Section 4 of the latest ordinance said that the provisions of Section 111 shall also not apply to-

(a) the first purchaser of a building or a unit of the building purchased from the builder in respect of purchase price of the building or unit of the building subject to the following conditions, namely:

(i) full payment is made through a crossed banking instrument to the builder during a period starting from the date of registration of the project with the board under this section and ending on the 30th day of September 2022, in case the purchase is from a new project; and

(ii) full or balance amount of payment is made through a crossed banking instrument to the builder during a period starting from the date of registration of the project with the board under this section and ending on the 30th day of September 2022, in case the purchase is from an existing incomplete project; and

(b) the purchaser of a plot who intends to construct a building thereon, if

(i) the purchase is made on or before the 31st day of December 2020;

(ii) the full payment is made on or before the 31st day of December, 2020 through a crossed banking instrument;

(iii) construction of such plot is commenced on or before the 31st day of December 2020.

(iv) such construction is completed on or before the 30th day of September 2022; and

(v) the person registers himself with the board on the online IRIS web portal.

The sub-Section 5 of the latest ordinance said that sub-Section (3) or (4) apply, the value or price of land or building, as the case may be, shall be higher of clause (a) or (b) below:

(a) 130 percent of the fair market value as determined by the board under sub-section (4) of Section 68; or

(b) at the option of the person making investment, the lower of the values as determined by at least two independent valuers from the list of valuers approved by the State Bank of Pakistan.

Sub-Section 6 of the ordinance stated that Sub-Section (3) and (4) shall not apply to –

(a) holder of any public office as defined in the Voluntary Declaration of Domestic Assets Act, 2018 or his benamidar as defined in the Benami Transactions (Prohibition) Act, 2017 or his spouse or dependents;

(b) a public listed company, a real estate investment trust or a company whose income is exempt under any provision of the ordinance; or

(c) any proceeds derived from the commission of a criminal offence including the crimes of money laundering extortion or terror financing but excluding the offences under the ordinance.